E-reg­is­ter to ver­ify loan seek­ers’ as­sets

The East African - - NEWS - By MARYANNE GICOBI The Eastafrican Pic: File

KENYA HAS created an elec­tronic registry for mov­able col­lat­eral that will help lenders search for credit in­for­ma­tion on both loan seek­ers and pro­posed as­sets to act as se­cu­rity.

In an ad­ver­tise­ment in the Kenyan dailies, the At­tor­ney-gen­eral gave step-by-step in­struc­tions. Po­ten­tial bor­row­ers will elec­tron­i­cally reg­is­ter their farm equip­ment, live­stock, durable con­sumer prod­ucts like tele­vi­sions and re­frig­er­a­tors, in­tel­lec­tual prop­erty as well as mo­tor ve­hi­cles on the database.

The elec­tronic regis­tra­tion is part of the Mov­able Prop­erty Se­cu­rity Rights Act 2017 which be­came law last year, and paved the way for the for­ma­tion of a cen­tralised elec­tronic registry for mo­bile as­sets that fi­nan­cial in­sti­tu­tions can use to ver­ify the se­cu­rity of­fered.

The law had pro­posed the es­tab­lish­ment of an Of­fice of Reg­is­trar and the ap­point­ment of a reg­is­trar to “re­ceive, store and make ac­ces­si­ble to the pub­lic in­for­ma­tion on reg­is­tered no­tices with re­spect to se­cu­rity rights.” These rights, which also in­clude de­posit ac­counts and elec­tronic se­cu­ri­ties are listed in the registry us­ing a unique iden­ti­fi­ca­tion num­ber that al­lows track­ing of those that have been used to se­cure bank loans or col­lat­eral.

How­ever, im­ple­men­ta­tion of the law is likely to be chal­leng­ing as the gov­ern­ment has to make reg­u­la­tions pre­scrib­ing a host of is­sues such as the min­i­mum value of as­sets to be listed and how their ex­is­tence shall be as­cer­tained.

Bor­row­ers who cur­rently use mo­tor ve­hi­cles as se­cu­rity, for in­stance, have to trans­fer own­er­ship to the bank and de­posit the log­book with the lender. Cars are the most com­mon as­set used to se­cure short- term loans in Kenya. Banks take full value of brand new cars as se­cu­rity and up to 80 per cent for used cars.

Pre­vi­ously, the use of as­sets as col­lat­eral was pegged on dif­fer­ent laws such as The Chat­tels Act and The Hire Pur­chase Act which was faulted as be­ing man­ual and lacked shar­ing of in­for­ma­tion which pro­longed the col­lat­eral process and in­creased the bor­row­ing costs.

Cars are the most com­mon as­sets used to se­cure short- term loans.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.