Press Release
October 7, 2016

Bam: Banks, financial institution back movable properties as collateral

Banks and other financial institutions are open to Sen. Bam Aquino's proposal allowing micro, small and medium enterprises (MSMEs) to use other properties as collateral for loans, aside from land and other immovable assets.

In the technical working group (TWG) conducted by the Committee on Banks on Sen. Bam's Senate Bill No. 354 or the Secured Transactions Act, different financial associations and concerned government agencies have supported the passage of the measure.

The TWG was attended by representatives from the Department of Finance, Land Registration Authority (LRA), Securities and Exchange Commission (SEC), Credit Information Corporation (CIC), Bangko Sentral ng Pilipinas, banks, financing organizations and MSMEs.

Sen. Bam said the proposal can provide a win-win situation for both MSMEs and banks with a healthier loan environment.

"The proposal encourages financial institutions to take part in MSME development without the fear of great risk," Sen. Bam stressed.

Usually, Sen. Bam said banks prefer immovable assets, such as houses or land, as loan collateral.

However, the senator said assets of MSMEs are mostly personal in nature, including equipment, inventory, motor vehicles and receivables, making it difficult for them to meet bank requirements to get loan approvals.

During the TWG, different stakeholders said MSMEs can easily acquire loans they need if banks would accept movable collaterals such as goods, livestock and crops and personal properties such as accounts receivables and sales contracts.

"Ang Secured Transactions Act ay isang mahalagang panukala para matugunan ang kakulangan ng kapital ng mga maliliit na negosyante para lumago ang kanilang mga negosyo," said Sen. Bam.

The measure will establish a comprehensive legal framework to govern lending transactions that involve the use of personal property as collateral, reducing the risk on the part of financial institutions and enticing them to provide loans to small businesses.

"Sa pamamagitan ng Secured Transactions Act, magkakaroon ng maayos na online registry at klarong patakaran para sa pagtrato ng mga 'movable collaterals' para mabawasan ang pangamba at mahikayat ang mga bangko na magpautang sa mga maliliit na negosyo," said Sen. Bam.

News Latest News Feed