The final consultation on the proposed movable property act has ended, but its implementation largely depends on the amendment of at least 10 existing key laws, officials said.
The World Bank had pushed the Bangladesh Bank for enacting such a law aiming to change the existing collateral system.
After a long process and consultations with different groups over the last two years, the central bank completed stakeholders' meeting last week.
BB officials told the FE Thursday it will now put forward the draft to the Financial Institutions Division (FID), the policy division of the financial sector.
They said if it is implemented, movable properties-machinery, goodwill, vehicles, accounts receivable and other tangible and intangible goods-will emerge as mortgage to take loans from the banking and non-banking sectors.
Currently lands and apartments are eligible for mortgages against a loan, but there are some more assets used as collaterals, which depend on the clients and banks' relationship.
In the meantime, people who are involved with preparing the draft act told the FE the government now needs to make its decision as to whether it will go to amend so many laws and ordinances or not.
For instance, they said, a large section of the money loan act-2003 will need to be amended.
Besides, other statutes such as motor vehicle ordinance, properties act, contract act, sale of goods act will also require amendment significantly to implement the movable property act in Bangladesh.
However, FID officials told the FE that they have not received the draft yet and that's why they are unable to comment in detail.
Rezwanul Huda, a joint secretary who oversees the Bangladesh Bank, told the FE: "We've not received the draft yet, how will we comment?"
He said, "I have learnt 10 acts will need to be amended, but the division will decide on how many law need revision."
He, however, said a major policy decision from the government side is needed to implement the movable property act.
Speakers who attended the meeting said that once the draft act is approved, the movable assets will be treated as eligible collaterals, which will allow enterprises to get credit.
They noted that the small and medium enterprises hardly get loans as they often lack collaterals and this will create an opportunity for such firms get access to the loans from the formal financial institutions.
SM Moniruzzaman, deputy Governor of the BB, said once it is enacted getting credit from financial institutions will become easier for the people, especially the marginalised people.
Getting credit is one of key barriers to improving Bangladesh's ranking of the Ease of Doing Business, ranked now 176 out of 190, below Afghanistan.
He hopes that after reforms in the existing the laws, Bangladesh will obtain a better rating in the doing business index in the years to come.
"Existing credit supply cannot fulfill; the loan needs of the people who are in real need of the credit but they have movable assets to offer as collateral," Mr Moniruzzaman said.
A large number of participants were from different commercial banks and non-bank financial institutions were attended.
Representatives from Bangladesh Investment Development Authority, Micro Credit Regulatory Authority, Insurance Development and Regulatory Authority and different chambers also attended the meeting.
jasimharoon@yahoo.com