The Cabinet has approved amending of the Secured Transactions Act No 49 of 2009 to enable Small and Medium Enterprises (SMEs) to leverage their assets and obtain credit for growth.
The proposal submitted to Cabinet by Prime Minister Ranil Wickremesinghe pointed out that a preliminary draft bill has already been prepared by the Legal Draftsman with regard to the above proposal.
In addition to the Secured Transactions Act, the government will also amend the Amend Prescription Ordinance (Chapter 68), Trust Receipts Ordinance (Chapter 86), Mortgage Ordinance (Chapter 89), Finance Leasing Act, No 56 of 2000, Inland Trust Receipts Act 14 of 1990, Companies Act, No 7 of 2007 and Registration of Documents Ordinance (Chapter 117) to allow the proposal to be implemented.
Presently moveable property is not considered as good security by bank and hence SMEs face difficulties to obtain bank financing. A well designed and well implemented secured transaction registry will increase access to finance for SMEs by creating a unified legal and institutional framework that allows them to leverage their moveable as collateral, the Cabinet Paper said.
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