Tajikistan became the first county among the former USSR countries that implemented holistic reforms of secured transaction. These reforms include nine laws and are in line with international standards of best practice. This is a big step ahead toward better financial inclusion for the country. In Tajikistan, lending traditionally was based on immovable property (with volatile market prices), while the business sector owns mainly movable assets.
The complex reforms is supported by the SECO project “Azerbaijan-Central Asia Financial Infrastructure Project” and is implemented by the International Finance Corporation (IFC, World Bank Group).
The reform process had started already in 2009 with the support of the World Bank Group. That time only the Law on Collateral was amended, but the system remained incomplete. Therefore, in 2014, upon the request of the business sector and the regulator, SECO and IFC initiated a second push for reforms. The process took four years, during which the project conducted several workshops and seminars to foster greater knowledge about the new concept for secured transactions. Although the country had limited experience to conduct such comprehensive regulatory reforms, Tajikistan has become a flagship for other countries in the region.
Since its beginning, the project’s focus was not only on development of a modern legal framework, but also on building enabling institutional framework and implementation mechanisms. Therefore, simultaneously, an electronic notice-based Single National Collateral Registry was designed and launched in February 2019; a group of professional property appraisers were trained and certified; trainings for judges and banking sector practitioners were conducted.
During the Conference on “Secured Transactions – Progress in Tajikistan”, Malika Ibrohimova, SCO Tajikistan Programme Officer congratulated the participants on the critically important milestone and noted: “Movable assets based lending is not a new phenomenon in the country but it was applied to the limited types of assets. The lack of independent and certified property appraisers, the lack of expertise, high operational cost and long court procedures served as barriers in making collateral requirements more flexible and adjusted to the clients’ needs. Now, the adopted reforms provide an opportunity for banks to take less risky and broader types of assets as collateral, and the banks can now introduce new products such as accounts receivables, future harvest and warehouse financing. All these should facilitate access to finance for previously underbanked SMEs”.