Collateral Registry
A centralised registry for movable assets established to expand access to finance, enhance financial inclusion, and enable the use of movable property as acceptable collateral.
Collateral Registry
A centralised registry for movable assets established to expand the range of qualifying collateral accepted by lenders as part of broader reforms to promote access to finance and enhance financial inclusion.
Introduction
The Reserve Bank has established a Collateral Registry for movable assets in order to expand the range of qualifying collateral accepted by lenders. This initiative forms part of broader financial sector reforms aimed at promoting access to finance and enhancing financial inclusion.
It is expected that this development will immediately benefit micro, small and medium enterprises (MSMEs) as well as household sectors and ultimately boost production.
What is the Collateral Registry?
The Collateral Registry is a publicly available database of interests in or ownership of movable assets tendered to secure loans. The Registry facilitates secured creditors or lenders to register security interests in movable assets while providing the public with notice of the existence of such security interests.
Movable assets that may be registered include livestock, household goods, crops, business stock, accounts receivable, and other qualifying property.
Legal Framework
The Collateral Registry is established in terms of the Movable Property Security Interests Act [Chapter 14:35], which allows the use of movable assets as collateral for loans.
What is a Security Interest?
A security interest is a property right in a movable asset that is created by an agreement between a lender and a borrower to secure access to a loan or a line of credit.
Who Can Use the Collateral Registry?
The Registry is accessible by users such as banking institutions, deposit-taking microfinance institutions, credit-only microfinance institutions, savings and credit cooperative societies, and other secured creditors to register security interests.
Other commercial institutions and individuals may also register as users to search the Collateral Registry.
Benefits of the Collateral Registry
Borrowers
- Increased access to credit
- Enable MSMEs to leverage movable assets for growth
- Reduced cost of credit in the long run
- Legal protection on property accepted as collateral
- Continued use and employment of collateral to realise value
- Allows borrowers to prove creditworthiness
- Springboard from informal to formal financing
Lenders
- Remote access to the system
- Reduced costs of loan administration
- Enhanced access to borrower information
- Reduced information asymmetry
- Reduced scope of over-borrowing
- Enhanced lender confidence
- Diversification of lending portfolios
- Clear rules of priority
- Promotes prudent lending and risk management
General Public & Economy
- Ability to search the registry before buying goods
- Protection from buying repossessed assets
- Development of industries
- Boosts production and employment creation
- Increased non-bank financial intermediation
Types of Movable Property Accepted as Collateral
- Agricultural products (livestock, poultry, crops)
- Industrial and commercial equipment
- Durable consumer goods and household items
- Agricultural equipment
- Inventory and raw materials
- Gold coins
- Accounts receivable
- Bank accounts
- Shares
- Patents
- Copyrights and trademarks
- Oil and gas
- Minerals
How the Collateral Registry Works
- Borrower approaches a lending or credit institution
- Lending institution searches the Collateral Registry
- Loan approval and security agreement are concluded
- Lending institution registers movable collateral
- Debtor keeps title and possession of the movable asset
- Lender has priority over the asset in case of default or insolvency
How to Perform a Search
- Visit collateralregistry.rbz.co.zw
- Click on “Search” on the top navigation bar
- Select “New Search”
- Choose search criteria: Debtor, Grantor, Collateral or Security Interest
- Submit to obtain search results
Group Borrowing
Individuals may apply for a loan as a group, as specified by lending institutions. Borrowers may use assets owned individually or jointly as collateral for a loan.
Security Agreement
A security agreement is a signed, binding contract between the debtor and the secured party in which the debtor agrees to grant a security interest in an asset to be used as collateral.
The agreement is concluded after the lender has assessed the value of the movable property against which the borrower requires credit.
