Collateral registry urges banks to accept movable assets for loans
The National Collateral Registry (NCR) has appealed to banks in the country to accept movable assets as collateral to increase the quantum of lending to small businesses.
The Registrar of NCR, Mr. Mohammed Mainasara, made the call in an interview with the News Agency of Nigeria (NAN) on the sideline of the 27th Seminar for Finance Correspondents and Business Editors held in Gombe from April 24 to 26, 2019.
The theme of the seminar was: “Repositioning MicroFinance Banks for Real Sector Growth”.
Mainasara said with the
introduction of the NCR, small businesses should now be able to access credit at reasonable rates.
“It is expected that the registry and credit reporting will motivate banks to accept moveable assets as collateral.
“It is also expected that the registry will reduce bank default rate, boost production and create employment. It will also cut down the cost of verifying borrowers by 35 per cent, thereby reducing the cost of credit and non-performing loans,” he said.
NAN reports that as at March 31, 631 financial institutions comprising 21 Deposit Money Banks (DMB), four merchant banks, one non-interest bank and four Development Finance Institutions (DFI) had registered on the portal.
Also, 553 Micro Finance Banks (MFBs), 13 NonBank Financial Institutions (NBFIs) and 34 finance companies have registered their institutions on the portal.
Mainasara said in the utilisation of the assets registered, banks would consider depreciation, which would impact on the loan value.
According to Mainasara, the registry supports the acceptability of movable assets such as equipment, machinery, vehicles, crops, livestock, account receivables, inventories and jewelry, among others as collateral for loans by financial institutions.
The registrar explained that the financial institution would then check with the registry to ascertain that the pledged movable asset had not been earlier pledged to any other institution as collateral.
He added that the online search was generally made using the unique Bank Verification Number (BVN) in the case of an individual and registration number in case of a corporate entity.