Collateral registry process begins

THE Reserve Bank of Zimbabwe (RBZ) has started the process to establish a collateral registry to allow the use of movable collateral to enable borrowers to leverage their movable assets to obtain credit, a top official has said.

BY TARISAI MANDIZHA

Speaking at the Zimbabwe Microfinance Conference last week, RBZ chief bank examiner, Ruzayi Chiviri said a collateral registry is primarily a database of movable assets taken by lending institutions as security.

“The Reserve Bank has started the process to establish a collateral registry. The collateral registry allows the use of movable collateral, enabling borrowers leverage their movable assets to obtain credit,” he said.

Chiviri said the Movable Property Security Interests Act [Chapter 14:35] covers the creation of security interests, registration of notices, priority of security interests, rights and obligations of the parties and enforcement of security interests among others.

The RBZ said the features of a collateral registry include a centralised registry, single data source for all movable collateral web-based system accessible 24/7, notice-based system, limited information, no documents, low registration fees to cover the cost of operation and searches by identifiers of debtors and serial numbers.

The regulator said the benefits of a collateral registry include, increased access to credit, reduced cost of credit and better use of capital

Chiviri said the apex bank has an implementation plan, which includes the development of collateral registry regulations, procurement and deployment of collateral registry software, training of banking institutions, microfinance institutions and key stakeholders and consumer awareness.

The government has implemented the credit registry and is expected to support the Reserve Bank’s role as a supervisor of financial institutions and there are three privately-owned credit bureaus, which are FCB, Fincheck and XDS.

The RBZ said a credit registry has loaded over 96% of banking sector loans — 370 000.

As at August 31, 2017, the credit registry had 44 registered subscribers, including 19 banking institutions and 23 microfinance institutions.

RBZ said the utilisation of the credit registry has been on an upward trend with cumulative utilisation at 39 614 reports as at September 2, 2017, up from 2 840 in May 2017.