THE IMPORTANCE OF SECURED TRANSACTIONS FROM THE PERSPECTIVE OF INCREASING THE ACCESS TO FINANCE Presented on STR conference organized by USAID FED on April 3, 2015. See details here: http://www.armeniafed.com/str-conference

1. Speaker: Li gi a Ghazaryan
Fi na nc i a l Sy s t e m De v e l o p me nt Di v i s i o n
Ce nt r a l Ba nk o f Ar me ni a
THE IMPORTANCE OF SECURED
TRANSACTIONS FROM THE PERSPECTIVE OF
INCREASING THE ACCESS TO FINANCE

2. CONTENT
 FI NANCI AL SYSTEM OF ARMENI A
 PROBLEMS ASSOCI ATED WI TH USAGE OF MOVABLE PROPERTY AS
COLLATERAL
 POSSI BI LI TI ES OF I NCREASI NG ACCESS TO FI NANCE WI TH
I NTRODUCTI ON OF SECURED TRANSACTI ONS
 THE PURPOSE AND BENEFI TS OF I NTRODUCI NG SECURED
TRANSACTI ONS

3. FINANCIAL
SYSTEM OF
ARMENIA IN 2013

4. Asset s of f i nanci al syst em/GDP - 77. 1%
Domest i c credi t t o pri vat e sect or/GDP - 40. 1%
Di st ri but i on of asset s i n f i nanci al syst em
89.5%
6.4%
1.5%
0.8%
1.8%
So ur c e : Ce nt r a l Ba nk o f Ar me ni a
Fi nanci al Syst em of Armeni a i n 2013

5. PROBLEMS ASSOCIATED
WITH USAGE OF MOVABLE
PROPERTY AS COLLATERAL

6. THE IMPORTANCE OF INTRODUCING SECURED
TRANSACTIONS FROM THE PERSPECTIVE OF
FINANCIAL SYSTEM AS A WHOLE
«While in the developing world 78 percent of the capital stock of a
business enterprise is typically in movable assets such as
machinery, equipment, or receivables and only 22 percent is in
immovable property, financial institutions are reluctant to accept
movable property as collateral. Banks heavily prefer land and real
estate as collateral.»*
«A sound legal and institutional infrastructure is critical to
maximize the economic potential of movable assets so that they
can be used as collateral.»**
*«SECURED TRANSACTIONS SYSTEMS AND COLLATERAL REGISTRIES», January, 2010, Investment
Climate Advisory Services/World Bank Group
**Doing Business, 2005.

7. WHY ARE FINANCIAL INSTITUTIONS NOT WILLING
TO TAKE MOVEABLE PROPERTY AS COLLATERAL?
• Lack of adequat e l egal f r amewor k:
• Re s t r i c t i o ns o n t y p e s o f a s s e t s
• La c k o f c l e a r c r e d i t o r p r i o r i t y
• Enf o r c e me nt i s s ue s
• Lack of r egi st r y f or secur i t y i nt er est s i n
movabl es:
• La c k o f i nf o r ma t i o n
• La c k o f p ubl i c i t y a nd t r a ns p a r e nc y
• Lack of exper i ence i n moveabl e asset
l endi ng:
• Re l a t i v e l y ne w t y p e o f p r o d uc t
• Lack of i nt er est :
• Ins uf f i c i e nt l e v e l o f c o mp e t i t i o n i n l e nd i ng
ma r ke t s

8. THE PURPOSE AND BENEFITS
OF INTRODUCING SECURED
TRANSACTIONS

9. THE IMPORTANCE OF INTRODUCING SECURED
TRANSACTIONS FROM THE PERSPECTIVE OF
INCREASING ACCESS TO CREDIT
I nt r oduct i on of secur ed t r ansact i ons
cont r i but es t o st abl e oper at i on of
f i nanci al syst em si mul t aneousl y assur i ng
di ver si f i cat i on and expansi on of l oan
por t f ol i o

10. THE IMPORTANCE OF SECURED TRANSACTIONS
FROM THE PERSPECTIVE OF INCREASING
ACCESS TO FINANCE
• For pr i vat e sect or :
• Ex p a nd e d l i s t o f i t e ms e l i g i bl e f o r us i ng a s
c o l l a t e r a l
• Inc r e a s e d a c c e s s t o c r e d i t
• Lo w d o c ume nt a t i o n
• For f i nanci al sect or :
• Ac t i v e p a r t i c i p a t i o n o f no n ba nk f i na nc i a l
i ns t i t ut i o ns i n c r e d i t ma r ke t
• Di v e r s i f i e d l o a n p o r t f o l i o
• Ac c e s s i bi l i t y o f i nf o r ma t i o n r e l a t i ng t o
bo r r o we r s
• Ex p a nd e d r i s k ma na g e me nt p o l i c y
• Inc r e a s e d r e p o r t i ng s t a nd a r d s

11. PROSPECTS OF
INCREASEING ACCESS TO
FINANCE

12. BASI C PRI NCI PLES USED I N THE PROPOSED SECURED
TRANSACTI ONS MODEL
• Expanded scope of secur ed t r ansact i ons
• Cr eat i on of r egi st r y f or moveabl e
pr oper t y
• I mpr ovement of l egi sl at i on and
i nt r oduct i on of r el evant mechani sms f or
enf or cement pr ocedur es
• Pr oper and t i mel y not i f i cat i on of
st akehol der s

13. Prospect s of i ncreasi ng access t o f i nance i n t he
resul t of i mpl ement at i on of secured t ransact i ons
ref orm

14. e-mail: ligia.ghazaryan@cba.am
Tel: :+374 10 592 689
THANK YOU FOR YOUR
ATTENTION