Draft bill on Secure Transactions approved by Cabinet

The Cabinet of Ministers this week approved to introduce a new law to facilitate borrowing for Small and Medium-scale Entrepreneurs, repealing existing regulations, Cabinet Co-spokesperson Gayantha Karunatilaka said yesterday. 

The Cabinet of Ministers gave approval to amend sections of the Prescriptions Ordinance, Trust Receipts Ordinance, Mortgage Ordinance, Finance Leasing Act, Inland Trust Receipts Act, Companies Act and Registration of Documents Ordinance in order to introduce the new bill titled Secured Transactions. 

The Cabinet at an earlier sitting gave approval to repeal the Secured Transactions Act No. 49 of 2009 to introduce the new legislation. 

The decision was taken to change the existing laws as they do not consider movable property to be good security in obtaining bank financing, limiting financing options for the SMEs. 

Once the new laws are passed in Parliament, SMEs will be able to leverage the majority of their assets for credit facilities with movable assets as collateral. 

In the proposal to present the new bill to the Cabinet for approval, Prime Minister Ranil Wickremesinghe in his capacity as the Minister of National Policies and Economic affairs stressed the need for amendments to existing law to remove hurdles to economic growth. 

The new law will also facilitate the implementation of a secured transaction registry which will increase access to finance for SMEs by creating a unified legal and institutional framework that allows them to leverage their movable as collateral.