New law in the works to help set up Myanmar credit market

The Ministry of Planning, Finance and Industry is drafting a Secured Transactions Law with assistance from the International Finance Corporation, U Htun Zaw, Deputy Director General of the Financial Regulatory Department, said.

The aim of the legislation is to facilitate the establishing of a modern and formal credit market through which borrowers can take loans using a broad range of moveable assets as collateral and micro, small and medium-sized enterprises have better access to financing.

The new law also provides for a formal registry for moveable collateral and recourse in the event of disputes regarding the rights to collateral.

The move was driven by government efforts to make getting credit, one of the factors considered in the World Bank’s ease of doing business index, easier. In its 2019 report, the World Bank noted that Myanmar needs to improve access to credit for businesses, as the number of loans made during the year had declined. One of the reasons is banks are unwilling to lend to borrowers without immoveable collateral like land and property.

Work on the new Secured Transactions Law began last year, U Htun Zaw said. In December 2018, Myanmar Credit Bureau inked an agreement with US-based Equifax New Zealand Services and Solutions Ltd to establish a credit bureau to help banks make better decisions when lending to borrowers and reduce their risks.

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Source : Myanmar Times

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