Now banks and financial institutions can lend even against collateral of movable assets such as gold, silver, grain and cattle following the setting up of a registry office for such transactions.

Traditionally, loans are provided only against collateral of immovable assets such as land and house in Nepal. Bankers say there has been limited lending on the basis of movable assets, mainly gold and silver.

After the government gave on Oct.5 the responsibility of a registry office to the Credit Information Bureau that also makes documentations of wilful defaulters, the way is now clear for BFIs to lend even against movable property. The CIB has been assigned the job for five years. The registry office ensures the loan transactions are secure as it keeps records of the collateral put to get the loan. The Secured Transaction Act 2006 has provisioned that such a registry office should document the information on loan transactions. “The provision of registry of transactions helps a bank to see first whether the assets to be put as collateral have been collateral for another bank,” said Sitaram Regmi, registrar at the registry office.

Following the registry of collateral in the office, such assets cannot be sold until the concerned bank requests the registry office to lift the ban.

“Not the banks, even individual persons can register their transactions with the CIB,” said Regmi. The Act also allows registering the contract papers.

source: Post Report (2010),"Loan on movable assets also now ",The Kathmandu Post, 12 October 2010