Himalayan News Service

Manila, March 28:

Asian Development Bank (ADB) will help increase access to credit for agriculture and small and medium enterprises in Pakistan by strengthening secured transactions, through a technical assistance (TA) grant of $500,000.Through extensive consultations, the TA will help develop a legal framework to strengthen and expand the use of collateral in securing financial transactions. The framework will facilitate the creation, perfection, and enforcement of collateral, and allow a wider range of assets to be used as collateral.

It will also design a modern registration system to cover all security interests, irrespective of their legal form. "Reducing risk through an effective secured transactions regime can lower lending rates and increase the supply of credit," says Ashok Sharma, an ADB senior financial economist, "Such reform could be a key to generating jobs and reducing poverty."Secured transactions in Pakistan are affected by the time, cost, and uncertainty in establishing claims to collateral, prioritising claims, and publicising the ranking of priorities. Access to credit is also limited by the underutilisation of movable property, such as tractors and grain, as collateral. These restrict farmers and small and medium size enterprises, most of which are engaged in trade and services with most of their assets in receivables and inventories.

"As the economy moves into the digital age, a secured transactions regime for movables has become a priority," notes Sharma.