By Fred SARPONG
The Collateral Registry (CR), a subsidiary of the Bank of Ghana (BoG), which is mandated to principally register charges and collaterals created by borrowers to secure credit facilities provided by lenders is expected to be fully automated next year.
It is also aimed at ensuring that its services are accessible to all participants and stakeholders of the credit market, particularly borrowers and lenders.
BusinessWeek learnt that the automation is in collaboration with the International Finance Corporation (IFC).
Under the Borrowers and Lenders Act, CR is the first collateral registry in Africa to be established in Ghana by the Bank of Ghana.
Sources at the CR indicated that measures were far in advance to start the full operation of the automation next year.
The CR also provides an avenue to lenders to search for information on the existence of relationships between lenders and borrowers as they relate particularly to movable and immovable collateral(s).
As a provisional measure, the CR has rolled out an electronic system that enables all the 26 universal banks and all the 41 licensed non-bank financial institutions, which have been trained, to access the services of the Registry in the comfort of their offices.
The system allows for easy registration of charges and easy searching for prior charges if any, on collaterals that are presented for credit.
BusinessWeek learnt that, as at July, this year, the Registry has recorded an impressive use of its facilities with a 100% patronage for the universal banks and 41% for the non-bank financial institutions. Other interested parties, such as rural banks, foreign banks and law firms, are accessing the services of the Registry.
Statistics at the CR indicates that as at August, this year, Total Charges registered was 4,440; sum of Collaterals Registered -9,892; Total Searches made - 1,367; percentage of Movable Collaterals registered - 79%; and percentage of Immovable Collaterals registered - 21%.
“It is expedient to register charges and collaterals at the Registry to guarantee the priority of your security interest over other interests in the collateral in the event of a default. By registering a charge, you establish priority over others who may claim an interest in the same property and who either do not register or register after you do,” an official of the Registry explains.
Available data in Ghana indicate that Small and Medium Enterprises (SMEs) constitute about 85% of the activities of the private sector. The development of these SMEs therefore leads to job creation, increased income and poverty reduction.
There are many who believe that the single most important factor constraining the growth of these SMEs is lack of easy access to credit.
A number of factors may be adduced for this development, including the following: high cost of borrowing and rigidity of interest rates; lack of a functioning Secured Transactions laws and registries for immovables and movables such as inventory, accounts receivable, livestock, crops, equipment and machinery; and lack of standards of disclosure of information by borrowers and lenders which contribute to the lack of transparency in the credit market.
To assist the Central Bank in regulating, supervising and directing the credit system, the Borrowers and Lenders Act 2008 (Act 773) was enacted to address the above challenges and create a Secured Transactions regime in Ghana. The Registry commenced operations from the February 1, this year.
The Collateral Registry (CR), a subsidiary of the Bank of Ghana (BoG), which is mandated to principally register charges and collaterals created by borrowers to secure credit facilities provided by lenders is expected to be fully automated next year.
It is also aimed at ensuring that its services are accessible to all participants and stakeholders of the credit market, particularly borrowers and lenders.
BusinessWeek learnt that the automation is in collaboration with the International Finance Corporation (IFC).
Under the Borrowers and Lenders Act, CR is the first collateral registry in Africa to be established in Ghana by the Bank of Ghana.
Sources at the CR indicated that measures were far in advance to start the full operation of the automation next year.
The CR also provides an avenue to lenders to search for information on the existence of relationships between lenders and borrowers as they relate particularly to movable and immovable collateral(s).
As a provisional measure, the CR has rolled out an electronic system that enables all the 26 universal banks and all the 41 licensed non-bank financial institutions, which have been trained, to access the services of the Registry in the comfort of their offices.
The system allows for easy registration of charges and easy searching for prior charges if any, on collaterals that are presented for credit.
BusinessWeek learnt that, as at July, this year, the Registry has recorded an impressive use of its facilities with a 100% patronage for the universal banks and 41% for the non-bank financial institutions. Other interested parties, such as rural banks, foreign banks and law firms, are accessing the services of the Registry.
Statistics at the CR indicates that as at August, this year, Total Charges registered was 4,440; sum of Collaterals Registered -9,892; Total Searches made - 1,367; percentage of Movable Collaterals registered - 79%; and percentage of Immovable Collaterals registered - 21%.
“It is expedient to register charges and collaterals at the Registry to guarantee the priority of your security interest over other interests in the collateral in the event of a default. By registering a charge, you establish priority over others who may claim an interest in the same property and who either do not register or register after you do,” an official of the Registry explains.
Available data in Ghana indicate that Small and Medium Enterprises (SMEs) constitute about 85% of the activities of the private sector. The development of these SMEs therefore leads to job creation, increased income and poverty reduction.
There are many who believe that the single most important factor constraining the growth of these SMEs is lack of easy access to credit.
A number of factors may be adduced for this development, including the following: high cost of borrowing and rigidity of interest rates; lack of a functioning Secured Transactions laws and registries for immovables and movables such as inventory, accounts receivable, livestock, crops, equipment and machinery; and lack of standards of disclosure of information by borrowers and lenders which contribute to the lack of transparency in the credit market.
To assist the Central Bank in regulating, supervising and directing the credit system, the Borrowers and Lenders Act 2008 (Act 773) was enacted to address the above challenges and create a Secured Transactions regime in Ghana. The Registry commenced operations from the February 1, this year.
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