Ulaanbaatar, Mongolia, February 20, 2017- IFC, a member of the World Bank Group, the Mongolian Ministry of Justice and Home Affairs, and other stakeholders today launched a web-based pledge-notice registry. The registry, part of a joint initiative to reform Mongolian secured transactions, will improve access to finance for small and medium enterprises (SMEs) by facilitating lending against movable assets as collateral. Other stakeholders involved in the project are Bank of Mongolia and Mongolian Bankers' Association, and Implementing agency of the government of Mongolia, General authority for intellectual property and state registration.
The registry is a major milestone in IFC's efforts to encourage financing against movable assets in the country. Access to finance is a challenge faced by many Mongolian SMEs, which struggle to obtain bank loans as they do not own land or buildings that banks generally seek as collateral.
The IFC-supported Law on Tangible and Intangible Movable Property Pledge, which governs the registry's functioning, will go into effect on March 1, 2017. The new law along with the registry, will allow SMEs to offer moveable assets such as accounts receivable, inventory, equipment, and warehouse receipts as collateral to banks. The new system will reduce the need for paper documents and will notify creation of pledge-rights to existing and prospective lenders. To date, over 1,000 people have attended knowledge-sharing events and trainings on movables lending organized by IFC.
"Supporting SMEs and entrepreneurs is one of the government's top priorities," said Mr. Enkhbayar B, Deputy Minister of Justice and Home Affairs. "With IFC's help, we will build a modern secured-transactions system, which is critical financial infrastructure to help small businesses expand and create jobs. Anyone with internet access can use the collateral registry from anywhere to register a pledge-notice or make a search. With this, citizens and legal entities can access state services without any bureaucracy and difficulties. A key objective in 2017 of the Ministry of Justice and Home Affairs is to bring government services closer to Mongolian citizens. This web-based pledge-notice registry system is in line with this objective."
"We are pleased to see this system go live today," said Tuyen D. Nguyen, IFC Resident Representative in Mongolia. "IFC will continue efforts to strengthen Mongolia's financial infrastructure to facilitate lending secured by movable assets and access to finance by SMEs."
Previously, IFC has helped develop modern secured-financing systems in more than 20 emerging markets, including China, Ghana, and Vietnam. In China, more than $3 trillion in loans backed by movable assets as security have been granted since 2007; many beneficiaries are small businesses.
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