Sri Lanka launches secured transactions registry to boost SME credit access – IFC

Sri Lanka has launched the Secured Transactions Registry (STR), a major reform aimed at improving credit access for small and medium enterprises (SMEs) by allowing the use of movable assets as collateral.

The initiative marks a significant milestone in building a more resilient and inclusive credit infrastructure for the country, according to a Press Release issued by the International Finance Corporation (IFC) today (November 3).

The new registry is the result of a joint effort led by the Credit Information Bureau (CRIB), in collaboration with the Central Bank of Sri Lanka (CBSL) and the Ministry of Finance, with technical assistance from the IFC, a member of the World Bank Group, and funding from the European Union’s regional initiative ‘Accelerating Climate Smart and Inclusive Infrastructure in South Asia’ (ACSIIS).

SMEs account for more than 75 percent of all businesses in Sri Lanka and provide 45 percent of total employment, yet many struggle to obtain loans because they lack fixed assets. The IFC noted that the new system will help expand the country’s financial services by allowing a broader range of borrowers including MSMEs, entrepreneurs and self-employed individuals to secure credit using movable property such as machinery, inventory, and equipment.

“Historically, borrowers in Sri Lanka, particularly MSMEs, have encountered significant barriers in accessing formal credit sources. This has been primarily due to their inability to provide fixed asset collateral and the absence of standardized credit practices. To address these challenges, the reforms to the legal and institutional framework governing movable collateral, seeks to establish an enabling environment that allows borrowers, especially MSMEs, to unlock the value of their movable assets,” said Chaaminda Bandara, Chairman of the Secured Transaction Registration Authority.

“The launch of the Secured Transactions Registry marks a transformative milestone in Sri Lanka’s credit ecosystem. By enabling the use of movable assets as collateral, the STR expands access to finance for SMEs and entrepreneurs who have traditionally been constrained by the lack of immovable assets. This initiative reinforces CRIB’s commitment to fostering financial inclusion and strengthening the digital credit infrastructure of the country,” said Pushpike Jayasundera, Director/General Manager, Credit Information Bureau of Sri Lanka.

According to the IFC, the absence of secured transaction laws and registries globally limits businesses from using movable assets as loan collateral. The reform in Sri Lanka is expected to especially benefit women entrepreneurs, who often possess movable assets to start or expand their businesses.

“Empowering SMEs is critical for creating jobs and sustaining economic momentum in Sri Lanka. A strong and efficient credit infrastructure is essential in unlocking the growth potential of these businesses and transforming the financial sector. IFC has been proud to contribute its expertise throughout every phase of this reform, and look forward to also supporting greater awareness for uptake. These efforts, backed by both public and private sectors, are poised to unlock enormous potential and drive lasting progress for generations to come,” said Gevorg Sargsyan, Country Manager for World Bank Group in Sri Lanka and Maldives.

As outlined in the IFC Press Release, the STR will include simple and inclusive rules for creating security interests, a fast and efficient filing database, and strong legal safeguards for enforcement and repossession in the event of default. Additionally, the IFC will continue to support financial literacy programs for SMEs, enabling them to use movable assets as collateral and enhance their access to formal financial systems.