In pursuant of its function to regulate, supervise and direct banking and credit system and ensure the smooth operation of the financial sector, the Bank of Ghana under the statutory mandate of the Borrowers and Lenders Act 2008 (Act 773) operationalize the establishment of the Collateral Registry Ghana on February 1, 2010 to register charges and collaterals created by borrowers to secure credit facilities provided by lenders.
The enactment of Act 773 ushered Ghana into the Secured Transaction Regime which has provided for the Creation, Perfection, Priority and Enforcement of security interest on both movable and immovable property. The operationalization of the Collateral Registry is an innovation in the credit delivery market enabling secured creditors (Financial Institutions, Leasing Companies and Trade Creditors) to give notice of their security interest in movable or immovable properties and also to establish priority of the security interest.
Prior to the enactment of Act 773 in December 2008, it was observed that the credit market was bedeviled with numerous challenges which stifled easy access to credit by businesses particularly Small and Medium Scale enterprises (SMEs). Borrowers complained about high interest rates, hidden charges, non-disclosure of pertinent information and unfair denial of access to credit and discrimination. Lenders on the other hand, were worried about high default rates, challenges in foreclosing on collateral through the courts, misapplication of funds by borrowers etc.
To aid in addressing these challenges, the Bank of Ghana after several consultations with stakeholders engineered the drafting and the enactment of the Borrowers and Lenders Act, 2008 (Act 773) to augment existing legislations governing the credit market in Ghana. The preamble of Act 773; to provide the legal framework for credit, to improve standards of disclosure of information by borrowers and lenders, to prohibit certain credit practices, to promote a consistent enforcement framework related to credit, and to provide for related matters informed the services rendered by the Registry to its clients which include:
- Registration of charges/Security interest
- Renewal of charges/Security interest
- Realisation of security, upon a default, without court order
In the course of the operations of the Collateral Registry in 2011, it became necessary to upgrade the Registry to an international standard Secured Transactions Registry. This required the upgrading the systems, processes and the underlying legal and regulatory framework of the Collateral Registry Ghana to a standard comparable with other Secured Transactions Registry across the globe. The underlisetd programs have been implemented:
- Review of the existing legal framework i.e Act 773
- Upgrading of the Information Technology [IT] infrastructure of the Collateral Registry to international Standard.
- The development of a communication and training strategy to educate and create awareness of stakeholders on the provisions of Act 773 and the operations of the Registry.
The review of the legal framework has culminated into a Borrowers and Lenders Bill 2017, which is an enhancement of the current Act and more responsive to the needs of the credit market and a modern secured transaction regime.
The upgrade of the Information Technology [IT] infrastructure led to the creation of a web based system which has enabled access to a broad spectrum of users and has simplified the mandatory registration of security interests and has also defined clearly issues of priority amongst competing interests. The system has a spectacular search mechanisms. At the click of a button, one can ascertain whether or not a property is encumbered and the extent of encumbrance.
The continuous awareness created by the Collateral Registry and the level of patronage of its services are a clear manifestation of the benefits that users have derived from the Registry following the enhancements of its systems, processes and procedures.
The Registrar, has under Act 773, been given some level of discretion under section 28 (1) to enable late charges to be registered without necessarily proceeding to court for a court order. The self-help provisions in the event of default in repayment of loan have been welcomed by industry players. The law provides for non-court options in enforcement of repayment in the event of default. It is obviously a trend that the courts are gradually grasping as the credit industry seeks to flex its muscle for a good debt recovery culture. It is also worth mentioning that ACT 773 seeks to provide some protection to Borrowers from unfair credit practices by lenders.
The attraction of the Registry to other Central Banks on the continent has been remarkable. Since its inception, delegations from the following countries have visited the Registry to learn our operations in order to replicate same in their home countries:
Central Bank of Liberia, Central Bank of Zambia, Central Bank of West African State (Banque Centrale des États de l'Afrique de l'Ouest (BCEAO), Central of Uganda with some Ugandan Parliamentarians, Central Bank of Nigeria, Central Bank of Malawi, Central Bank of Zambia, Central Bank of The Gambia, Central Bank of Sierra Leone, Central Bank of Mozambique.
The establishment of the Collateral Registry is indeed a welcomed inroad in credit delivery in Ghana.