RBZ Collateral Registry fast gaining traction
The Reserve Bank of Zimbabwe (RBZ) Collateral Registry system is fast gaining traction since inception in 2022 as it has recorded 377 active registered security interests with a total loan amount of $620,02 billion as at July 24, 2023, the Reserve Bank of Zimbabwe has said.
In a bid to promote access to credit, the central bank launched an online Collateral Registry in terms of the Movable Property Security Interest.
In his Mid-Term Monetary Policy Review Statement issued on Wednesday last week for the period ended 30 June, RBZ Governor, Dr John Mangudya indicated that since November 2022, the date which the act was gazetted, 46 institutional users had been registered in the system.
Reserve Bank of Zimbabwe (RBZ)
The operationalisation of the collateral registry marks a critical milestone in access to credit and will facilitate borrowing opportunities for micro, small to medium enterprises.
The central bank included a wide range of movable assets to be used as collateral including gold coins and livestock.
The central bank established a Collateral Registry for movable assets in order to expand the range of qualifying collateral accepted by lenders as part of the broader reforms to promote access to finance and enhance financial inclusion.
The development is set to benefit micro, small and medium enterprise (MSMEs) as well as the household sectors and ultimately boost production.
SMEs face difficulties in accessing funding as financial institutions demand collateral in the form of immovable property like houses.
The banking sector has in the past been accused of imposing stringent conditions for businesses that need funding.
“Registered institutions include banks, microfinance institutions and law firms. The Collateral Registry system recorded 377 active registered security interests with a total loan amount of $620,02 billion as at 24 July 2023,” said Dr Mangudya.
Dr Mangudya said the credit databases at the Credit Registry and the three private bureaus continue to offer reference points for lenders to check the credit worthiness of clients during origination and through the cycle of the loans.
The four credit reporting institutions in the country held 22,96 million searchable records as at June 30, 2023.
RBZ Governor Dr John Mangudya
In the Credit Registry the open and closed loan records were at 28,61 percent and 71,39 percent of the total loan records of 2,26 million as at June 30, 2023, respectively.
In the period under review, registered subscribers accessing the Credit Registry database were 243.
According to the report, gender distribution of loans is generally skewed towards male borrowers who constituted 68,01 percent while female borrowers constituted 31,99 percent of loan contracts in the Credit Registry.
As part of the communication strategy to promote awareness and ensure effective operationalisation of the Collateral
Registry, the central bank has been conducting training and awareness workshops in Harare, Bulawayo, Gweru, Masvingo, Mutare and Beitbridge between April and July this year.
The workshops targeted banking institutions, microfinance institutions, MSMEs and Law firms.The reserve bank plans to upscale its communication strategy to ensure awareness and full adoption of the Registry across the country.
Last year, the central bank expanded the collateral registry in a development seen as a springboard to move from informal to formal financing.
It indicated that qualifying movable collateral varies from one lending institution to another, however, the generally acceptable movable property includes agricultural products such as livestock, poultry, crops, industrial and commercial equipment, durable consumer goods and household items, agricultural equipment, inventory and raw materials, gold coins, shares, patents, copyrights and trademarks.
According to the central bank, individuals may apply for a loan as a group as may be specified by lending institutions.
They may use their assets that they own individually or jointly as collateral for a loan.-chronicle
