Russian bank ready to accept fish capture quotas as loan security

May 25, 2011 16:09

Sberbank, the largest credit institution in Russia and CIS, has initiated a draft law enabling use of fish capture quota shares as security for bank loans with the respective amendments to be introduced into Russia's Federal Law on Fisheries, according to Russian Fish Insider Report published by http://www.megafishnet.com/.

Experts think that introduction of quota shares turnover will attract extra investments into the Russian fishery industry and increase funding of working capital though it will be a real challenge to assess the value of the fishing rights correctly.

In particular, the draft law provides for auction trade of the rights to make loan agreements, security suspension and compensation issue in case of confiscation of the aquatic biological resources for state purposes, exaction of quota shares declared security, formation of bank reserve for potential losses associated with loans, etc. At the same time, the document does not cover the method of evaluation of quota shares as security which would characterize liquidity of the assets.

Actually the nation's fishermen agree that it is an extremely difficult task to monetize the capture quota shares as the current legislation does not cover the system of stable property rights for natural resources, aquatic inclusive.

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