Kenyans seeking credit from financial institutions will now enter their collateral details once, making credit access process faster, thanks to the move by the Central Bank of Kenya to create a single electronic registry to be accessed by all banks.
Initially, Kenyans have been forced to fill in collateral forms anytime they apply for loans in different financial institutions, a tedious exercise that has been slowing credit access in the country.
A centralized registry is also CBK’s answer to the difficulties facing borrowers seeking to realize full value of assets that remain in the hands of one bank they borrowed from in the past.
Currently, a person who has used his land title deed as collateral for a previous loan has to find a means of settling the debt and getting the security back in his name before he can approach another lender for money using the same title deed.
The CBK’s initiative will now enable borrowers to use a single security to borrow from two banks if its value can cover both.
“The objective of this initiative is to promote consistency and certainty in secured financing relating to movable assets and to enhance the ability of individuals and entities to access credit using such assets,” said CBK Deputy Governor Sheila M’Mbijjewe
She added that a centralized register will also make it easy for a borrower to transfer loans across the industry, which is currently impeded by the tedious and costly process of revaluing the asset.
An electronic register for assets like land is expected to open up the mortgage market, whose growth has over the years remained relatively painstakingly low. There are 25,000 mortgage loans against a population of 21 million deposit accounts.
This is yet good news to borrowers in the country who are still in celebratory mood following the presidential assent to the bill that caps banks interests at 4 percent above CBK’s a reference rate.