The Securities and Exchange Commission of Pakistan recently created an electronic registry to encourage the country’s banks, microfinance institutions (MFIs) and leasing companies to accept moveable assets as collateral for loans. The collateral registry will help these institutions “to register rights in moveable assets in offering credit to people, as well as micro-, small and medium-sized enterprises” (MSMEs). Moveable assets may include liquid assets such as machinery, furniture, inventory, accounts receivable and digital assets.
The launch of the registry is a part of a wider initiative by the Pakistani government to reform and develop the country’s market for movable-asset lending. This wider initiative is supported by the World Bank Group’s International Finance Corporation.
IFC’s Country Manager for Pakistan, Nadeem Siddiqui, argued, “This represents a significant milestone for Pakistan and comes at a time when the country’s MSMEs are adversely impacted by COVID-19. This global crisis clearly shows the importance of boosting financing to MSMEs, especially as lending to these only stood at 8 percent of [Pakistani] banks’ financing last year, which is far less than in other countries of the region. Hence, more needs to be done to improve the credit infrastructure and to de-risk the MSME sector.”
The Securities and Exchange Commission of Pakistan was established in 1999 to: (1) regulate the corporate sector and capital markets; (2) regulate and supervise insurance companies, non-banking finance companies and private pension schemes; and (3) oversee external service providers to the corporate and financial sectors.
IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2019, it reported total assets of USD 94.3 billion.
The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2020, it has 189 member nations. The group encompasses: (1) IFC; (2) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes.
By Madigan Ruch, Research Associate
Sources and Additional Resources
IFC press release on asset registry in Pakistan
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/5CF794E8A10063EA8525856500197B17
Securities and Exchange Commission of Pakistan homepage
https://www.secp.gov.pk/
World Bank guide on movable assets
http://documents.worldbank.org/curated/pt/193261570112901451/pdf/Secured-Transactions-Collateral-Registries-and-Movable-Asset-Based-Financing.pdf
Previous news item on IFC
https://www.microcapital.org/microcapital-brief-ifc-guaranteeing-local-currency-equivalent-of-25m-for-union-bank-to-invest-in-smes-women-led-businesses-in-nigeria/
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