Shura Council to Discuss Law Allowing Movable Assets as Collateral for Loans

Manama: The Shura Council will discuss a new law allowing companies and individuals to use movable assets as collateral to secure financing from financial institutions. The proposed legislation aims to support small and medium enterprises (SMEs) and enhance the business environment in the Kingdom.

The law will provide companies without real estate assets with alternatives to provide bank guarantees, including equipment, machinery, inventory and outstanding invoices. This move is expected to boost lending and investment in the local market, particularly benefiting SMEs, which often lack real estate assets to mortgage.

The Shura Council's Financial and Economic Affairs Committee has recommended approving the draft law, citing its potential to support Bahrain's credit market and enable private sector institutions to use movable assets as collateral.

The Ministry of Industry and Trade stressed the law's strategic importance, highlighting its role in supporting economic development and regulating economic transactions. The Central Bank of Bahrain has also endorsed the draft law, noting its conformity with existing regulatory frameworks.

The new law is expected to enhance Bahrain's ranking as a business destination and contribute to the country's economic growth.