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Thursday, 16 June 2011

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CRIB help for SMEs through new registry

Credit Information Bureau of Sri Lanka announced the launch of its Secured Transaction Registry (STR) to encourage prospective borrowers particularly in Small and Medium Enterprises (SME) to seek loans from banks using movable assets as security.


Central Bank of Sri Lanka Deputy Governor Priyantha Fernando and officials at the launch of Secured Transaction Registry (STR) . Picture by Ruwan de Silva

Speaking at the launch of STR, Central Bank of Sri Lanka Deputy Governor Priyantha Fernando said that STR is an electronic database which contains required information related to a security agreement .

The main objective of the STR is to maintain a database accessible to any interested party in verifying security interest in movable assets of borrowers.

All the movable assets of prospective borrowers will be included into the STR with their consent. It will assist creditors who wish to provide credit to a debtor and determine the priority of contradictory claims over the same property subject to multiple security agreement.

Under the security agreement, both creditor and debtor are subjected to monetary obligation agreed by both parties and agreement houses information related to the parties and the specific collateral secured. It may also contain the terms and conditions of payment and amount borrowed and other relevant data as stipulated by banking regulations. Every time a transaction takes place relevant information will be entered into the registry and this would create a source of accurate information with a transparent function of the system.

“It is apparent that many banks are reluctant to grant loans using movable assets as collateral since it is considered as a risky procedure. With the introduction of STR, banks will be able to obtain accurate information on movable assets of prospective borrowers through STR and this will create more opportunities for banks to offer credit with movable assets as collaterals.

Major clients of the STR would be banks, registered finance companies and leasing companies.

In order to have a secure transaction system in Sri Lanka, STR and Secured Transaction Act (STA) need to be implemented, at present, STR is in place and STA has been approved in Parliament. STA is also expected to be made operational by publishing a gazette shortly,” Fernando said.

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