Secure Transactions of (Moveable Assets) Bill, 2023 passed to broaden collateral terms

The Secure Transactions of (Moveable Assets) Bill, 2023 was passed in the parliament on Thursday, aiming to bring movable property under the definition of collateral for bank loans.

Law Minister Anisul Huq, in absence of Finance Minister AHM Mustafa Kamal, moved the bill and it was passed by voice vote.

If enacted the new law will bring a broader definition of collateral for bank loans.

As a result, not only the immovable property, but also fixed deposits or movable property like gold, silver, intellectual property can be taken as collateral for loans from banks, and financial institutions.

However, the movable property must be registered for a mortgage. For this purpose, it has been decided to have a separate authority for the registration of movable assets for which valuation of those is possible, mentioned in the proposed law.

As a result, both banks and borrowers will benefit, and providing loans will be easier, as stated in the text of the bill.

In order to borrow a certain amount of money from a bank or financial institution, a visible asset or equal value like land or building must be deposited or mortgaged in the bank.

With the new 'Secured Transactions' Bill, banks will be able to hold other floating assets to market value as collateral instead of tangible assets to borrow from banks.

As per the proposed law, from now on anyone can take loans against fixed deposits in banks, gold and silver or raw materials kept for export.

Anything that is copyrighted can be pawned to the bank. Also, products like furniture, electronics, software, and apps can also be kept with the bank while taking loan, subject to pricing.

Besides, the bank will also give loans against fish in ponds, tree gardens, and cattle.

The law would pave the way for the small and medium-level entrepreneurs to take bank loans.

Opposition Jatiya Party MPs heavily criticised the Bill.

They said that those who have defaulted on loans with immovable property, they have no immovable property to give, now they will take loans with immovable property.

"The Act was brought in to facilitate looting of immovable property. The law has put a hand in people's pockets," they said.

Jatiya Party MP Fakhrul Imam claimed that the government is enacting this law as a part of the long-term plan as the economic situation will worsen in the future.

"The bank has gone bankrupt. People will go bankrupt in this way. Can you handle it? It wasn't necessary. This will increase the chaos a lot," he said.

Questioning why the Finance Minister is not present in Parliament, Fakhrul Imam said, "I have seen the Law Minister performing the duties of the Finance Minister for two or three days."

Another Jatiya Party MP Pir Fazlur Rahman complained that this law is being made to provide benefits to big loan defaulters and said that the condition of loans given by banks with immovable property is dire.

"Those who have defaulted on loans with immovable property, have no immovable property to give, now they will take loans with immovable property. The Bill was brought in to facilitate looting of immovable property," he alleged.

Jatiya Party MP Roshan Ara Mannan said that immovable property is temporary. After some time this property will not exist. Using fixed assets billions of Taka have been taken through the documents of houses and forged documents in each bank.

"Now there will be no money in the bank if there is an opportunity to lend by keeping the temporary property. It will also increase the scope of bank loans. It will also increase the tendency of defaulters. This is not a welfare bill. It has become a culture and tradition to smuggle borrowed money abroad."

Jatiya Party MP Hafiz Uddin Ahmed said that the Finance Minister is a businessman, he will understand his side.

"The law minister should have looked at the legal aspect. I would have been happy if it had not been raised through him."

Criticising the Finance Minister, Hafiz Uddin said, "The Finance Minister does not come to Parliament."

"He is physically ill. There are many ministers of state. If a state minister was appointed in his ministry, other ministers would not have to suffer for this."

Law Minister Anisul Haque said the incidents of defaulted loans have not taken place only now.

"Loan defaults are not only in Bangladesh, but all over the world. Wherever loans are involved, there are some defaulters. If the government had not taken any measures to stop the culture of loan defaults, then they could have said that. The government takes initiative to secure and rescue the debt," the Law Minister added.

Pointing to Nobel laureate economist Dr. Muhammad Yunus, the Law Minister said, "Nobel Prize can be obtained with 20-40 percent interest on micro-loans, but people cannot be developed, people suffer. The law is being made for this."