The Reserve Bank established a Collateral Registry in terms of the Movable Property Act [Chapter 14:35] as part of the broader reforms to promote access to finance and enhance financial inclusion. It is expected that these measures will boost production and benefit borrowers in the micro, small and medium enterprise (MSMEs) as well as the household sectors. The Registry system can be accessed online to conduct searches and/or register security/collateral.
The Act provides for the creation of a Movable Collateral Registry, whose objectives are:
- providing a mechanism for efficient registration of security interests in movable property and realisation of such interests in the event of a default,
- creation and perfection of movable security interests.
- providing a platform to notify parties about the existence of a security interest in movable property, and
- establishing the priority of creditors vis-a-vis third parties.
The introduction of the secured transactions system is expected to increase the scope of qualifying collateral acceptable to lending institutions. Further, entrepreneurs and households are expected to leverage on their movable assets by offering them as collateral. The Registry also facilitates searches by potential lenders to determine the status of movable assets offered as collateral by potential borrowers.
Accessing the Collateral Registry
The Collateral Registry’s online portal can be accessed from any location with internet connectivity and is available 24 hours a day. The Registry can be accessed by secured creditors, such as banks and microfinance institutions, to conduct searches and effect security registrations. Any person can conduct an electronic search on the Registry database to determine whether a particular movable asset is encumbered.
Payment for Collateral Registry services
The Collateral Registry shall charge users for registering security/collateral, while no fees are payable for conducting searches. Payment for registration services will be made via post-paid or pre-paid accounts as outlined below:
- Post-paid Account Access
- Prepaid Account Access
Institutions with registered accounts can register notices of security interests or request for search certificates without making any advanced payments. The transaction fees are settled at the end of the month after a statement is generated for the client, detailing all billable transactions.
Institutions/individuals with registered accounts have the option to operate on a prepaid basis. The users will be required to pre-fund their Registry wallet/account which will then be debited as the user transacts.