Banks to ascertain status of collateral through NCR
Deposit Money Banks and other financial institutions in the country have been asked to forthwith, register all collateral used in obtaining loans with the Nigeria Collateral Registry, NCR.
The directive which has been in effect since Monday last week, will help the financial institutions ascertain the encumbrance status of assets sought to be used as collateral for loan.
The Central Bank of Nigeria, in a circular by its Director, Financial Policy and Regulations Department, Kevin Amugo, said the new directive is targeted at providing a regulatory framework for accessing credit secured with moveable property, while also creating and perfecting security interests and realizing security interests in moveable.
According to the CBN, the notice-base-on-line NCR is now operational and can be accessed at the registry’s website, directing that, “all banks and other financial institutions are hereby required to register the security interests in moveable assets with the NCR with effect from Monday July 4, 2016.”
The apex bank also directed that all financial institutions “conduct search on the NCR as part of the credit assessment and risk management process in order to ascertain the encumbrance status of moveable assets sought to be used as collateral for credit facilities.”
CBN, in furtherance of its statutory mandate of promoting a sound financial system in Nigeria had issued and gazetted in February 2015, the Registration of Security Interests in Moveable Property by Banks and Other Financial Institutions in Nigeria.
The move is also aimed at providing for the establishment and operation of the collateral register and stimulate responsible lending to micro, small and medium enterprises by providing an efficient mechanism for registration of the security interests in moveable assets and realization of such interests in the event of a default.