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The People's Bank of China wants to remove legal obstacles for using movable assets as collateral for loans, which would increase lending security for banks and help obtain loans for medium- and small- businesses, the 21st Century Business Herald reported Wednesday.
The change will allow movable assets such as machinery, vehicles, warehouse stock or even receivables to be used as collateral while still remaining available for use by their owners, thus matching a lending standard fairly common in the western world.
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The paper said 70 percent of collateral accepted by Chinese banks are parcels of land, buildings or other fixed facilities, but 70 percent of the assets of the country's medium- and small- businesses are accounts receivables and inventories.
Reform and innovation of collateral regulations under the Property Law would help solve financing problems for China's medium- and small- businesses, said Hu Xiaolian, deputy governor of the central bank.
The other main thrust of the change is to increase lending security for banks by creating a register of movable assets that have been pledged as collateral to secure a loan.
China's Supreme People's Court and the central bank are soliciting suggestions for changes on collateral regulations, the report said.