eBusiness Weekly
Kudakwashe Mhundwa
HARARE – The Reserve Bank of Zimbabwe says it is in the process of finalising the Collateral Registry.
The registry has been on the cards since 2017.
Establishment of the Collateral Registry will allow borrowers with movable property to prove their credit worthiness to potential lenders in line with international practices.
A collateral registry is a publicly available database of interests in or ownership of movable assets allowing borrowers to prove their credit worthiness and potential lenders to assess their ranking priority in potential claims against a particular collateral.
RBZ deputy director for banking supervision Audrey Hove confirmed the development saying the bill was signed and they were in the procurement process.
“For the collateral registry the Bill was signed so we are now at procurement stage, we are now procuring the system for implementation,” said Ms Hove.
According to a concept paper on the credit registry by the Reserve Bank of Zimbabwe (RBZ) and the Ministry of Finance and Economic Development, Micro, Small and Medium Enterprises (MSMEs) and individuals are failing to access the credit market due to lack of collateral that mainstream lenders (financial institutions) require as security for lending.
This is despite the recognition that MSMEs contribute significantly to the country’s economy. “Notwithstanding these realities, the major economic agents (SMEs and individuals) are failing to access the credit market due to their lack of collateral.
The collateral registry shall file notices of security interests in movable properties and determine priority in a borrower’s collateral. It is believed that a reliable collateral registry or pledge system that allows the use of movable assets as collateral can significantly improve small entrepreneurs’ access to loans.
The collateral registry system is aimed at providing a mechanism for efficient registration of security interests in movable property and realisation of such interests in the event of a default.
Among others, it also seeks the creation and perfection of movable security interests as well as providing a platform to notify parties about the existence of a security interest in movable property.
