Mongolian banks support reforms to increase SME lending
The FINANCIAL -- On 19 October 2012 the Mongolian Bankers Association (MBA), in collaboration with the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), hosted a half-day roundtable to discuss reforms needed in Mongolia to provide small and medium-sized enterprises (SMEs) and other borrowers with wider access to finance.
Secured Transactions Reform is an initiative to create a legal framework that will enable Mongolian lenders to secure loans with “movable collateral”. As the European Bank for Reconstruction and Development reported, this will involve the creation of a nationwide registry for equipment, accounts receivable, inventory and other types of movable collateral. The registry will provide real time information on priority interests against competing claims on the same collateral. As SMEs will be able to use more of their assets as collateral, the reform can contribute to increased access to finance.
“Banks are eager to enhance access to finance through this proven approach of systematically registering movable collateral. This will benefit both lenders and borrowers,” explained Bold Magvan, President of the MBA.
The EBRD’s Legal Transition Team contributed to the reform through a technical assistance programme by advising the Ministry of Justice on the draft secured transactions law and other important legal changes required.
“The Secured Transaction Reform aims to improve SME access to finance and thus could be a contributing factor to Mongolia’s economic diversification,” explained Philip ter Woort, Head of the EBRD’s Mongolia Resident Office.
With respect to implementation, IFC, the arm of the World Bank Group focused on private sector development, is contributing to the initiative through technical assistance regarding setting up the registry and training lenders on best practices for movable collateral lending.
“Small and medium enterprises are important to diversify the economy, generate jobs and create opportunities for people,” Tuyen Nguyen, IFC’s Resident Representative in Mongolia, highlighted. “IFC is committed to supporting Mongolia’s enabling environment for small business with our financing and advisory services.”
The initiative is funded and implemented by the European Union, the Swiss State Secretariat for Economic Affairs (SECO), the EBRD and IFC.
Secured Transactions Reform is an initiative to create a legal framework that will enable Mongolian lenders to secure loans with “movable collateral”. As the European Bank for Reconstruction and Development reported, this will involve the creation of a nationwide registry for equipment, accounts receivable, inventory and other types of movable collateral. The registry will provide real time information on priority interests against competing claims on the same collateral. As SMEs will be able to use more of their assets as collateral, the reform can contribute to increased access to finance.
“Banks are eager to enhance access to finance through this proven approach of systematically registering movable collateral. This will benefit both lenders and borrowers,” explained Bold Magvan, President of the MBA.
The EBRD’s Legal Transition Team contributed to the reform through a technical assistance programme by advising the Ministry of Justice on the draft secured transactions law and other important legal changes required.
“The Secured Transaction Reform aims to improve SME access to finance and thus could be a contributing factor to Mongolia’s economic diversification,” explained Philip ter Woort, Head of the EBRD’s Mongolia Resident Office.
With respect to implementation, IFC, the arm of the World Bank Group focused on private sector development, is contributing to the initiative through technical assistance regarding setting up the registry and training lenders on best practices for movable collateral lending.
“Small and medium enterprises are important to diversify the economy, generate jobs and create opportunities for people,” Tuyen Nguyen, IFC’s Resident Representative in Mongolia, highlighted. “IFC is committed to supporting Mongolia’s enabling environment for small business with our financing and advisory services.”
The initiative is funded and implemented by the European Union, the Swiss State Secretariat for Economic Affairs (SECO), the EBRD and IFC.
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