Graphic Business News

Registration of collaterals increase

By: Ama Amankwah Baafi

Registration of collaterals at the Collateral Registry (CR) at the Bank of Ghana (BoG) increased to 82,302 in 2018 from 57,509 in 2017.
This represents an increase of 40 per cent. 

Within the same period under review, searches on properties at the registry increased from 25,049 in 2017 to 36,889 in 2018.

This is as a result of activities such as a financial literacy and public awareness campaign, institutional compliance enforcement and public education put in place to increase awareness of the existence of the CR.

Hitherto, there was low awareness of the existence of the CR financial infrastructure that have been put in place by the BoG to empower consumers and the business community in accessing credit and to promote responsible lending and borrowing in the country.

A source at the CR said the searches and registrations were conducted by individuals and corporate organisations, adding that the searches were conducted mostly on landed properties, whereas registrations were on movable assets such as cars.

It said the whole idea of the existence was to help the public make an informed decision whether to go ahead to purchase an asset or not.

“If you are a corporate institution, before you give out a loan you must check in our system to see who else has an interest in that asset before you lend to a borrower. Again, as an individual you need to conduct a search at the CR on a property you want to acquire to ascertain whether its true status had been used as collateral for a credit facility or not,” the source stated.

The source cautioned that if an individual bought a personal property that was subject to a security interest registered at the CR, it would be repossessed to pay off debt that might have been incurred by the previous owner.

Further, it said the individual may lose the item if the previous owner has not repaid the debt in full.
“You should do due diligence by conducting a search to ensure there is no money owing on a property you intend to acquire such as a car, land or house,” it said.

The registry
The CR was established by the Borrowers and Lenders Act, 2008 (Act 773) to principally register charges and collaterals created by borrowers to secure credit facilities provided by lenders.

A user may conduct a search by using the name of the borrower and / or; the collateral identification number; or the registration number.

Formerly, lenders had no effective means of searching prior charges, if any, on properties presented to them for credit, resulting in numerous and protracted litigations in courts and a sustainable rate of non-performing loans recorded by banks.

Improved system
The source said to be able to deal with challenges associated with registration, a new and improved system had been put in place.

“The new system is user-friendly and through that we are finding a way to control anomalies and integrate other payment options soon,” it said.