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694 financial institutions sign for N1.80trn, $1.36bn facility

Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said that 694 financial institutions had bought into the National Collateral Registry (NCR) portal for movable assets as at September 30, 2020 as part of moves to advance credit facility worth of N1.80 trillion to borrowers.

Emefiele described NCR as an integral part of financial reforms initiative of the bank. He said the figure comprised 22 deposit money banks, four merchant banks, five development finance institutions, 580 microfinance banks, 37 non-bank financial institutions, 43 finance companies, one primary mortgage bank and two non-interest financial institutions that have registered on the NCR portal as first step towards buying into the registry’s operations.

The CBN governor spoke yesterday in Abuja at a workshop organised for judiciary officers on their role in ensuring effectiveness of the secured transactions in movable assets and credit reporting Act 2017.

Represented by Director, Development Finance Department, Mr. Yusuf Philip Yila, Emefiele said based on 113,153 financing statements registered on the registry in respect of movable assets offered as collateral, lending banks availed credit amounting to N1.80 trillion, $1.36 billion and €10.92 million to 273,435 borrowers. A breakdown of the loan beneficiaries are: 262,904 individuals, 1,421 large, 4,260 medium, 1,433 micro and 3,417 small businesses.

The CBN governor said: “Some components of the foreign currency-denominated loans represent muchneeded capital inflows into the economy and this attests to the power of the registry and, indeed, the STMAcentric reforms, to engender economic development. “Ultimately, it underlines our resolve to sustain the reforms and improve public appreciation and, especially, judicial perception, of its potential.

“These efforts culminated in the CBN’s Regulations No. 1 of 2015 on Registration of Security Interest in Movable Property by Banks and Other Financial Institutions in Nigeria, which, among others, established the National Collateral Registry (NCR). In 2017, the overarching Secured Transactions in Movable Assets Act (STMA) came into force, with a mandate for the NCR to receive, register, store and provide information about security interests in movable assets.”

He said acceptance of movable assets as collaterals by financial institutions was a defining moment in banking sector. “On the other hand, the vast majority of MSMEs, which often lack adequate fixed assets that are supposedly considered conventional collateral, can obtain financing for their investment in productive activities using their movable assets registered on the NCR as collateral.

“Similarly, the CRA presents a win-win for lenders and borrowers by fostering responsible lending and borrowing. It does so by providing statutory backing for financial institutions to conduct due diligence on potential borrowers to ascertain their creditworthiness, thus curbing reckless lending.

In the same vein, it provides MSMEs with a platform to prove their creditworthiness and leverage their credit history to obtain additional credit as reward for diligence in previous borrowing,” he said. In his keynote address, the Chief Justice of the Federation, Tanko Muhammad, underscored the need for the judiciary to be strengthened to help the financial sector protect credit transactions. The financial sector and indeed the entire economy, CJF noted, stand to benefit from quick dispensation of justice in commercial or business transactions.

In his contribution, World Bank Country Director, Shubham Chaudhuri, described the workshop for judiciary officers as timely and apt. He said the objective of the workshop fit into the banks’ mission in Nigeria. “World Bank is a devel-opment partner, a cooperative owned by member countries, including Nigeria. Its mission is to help member countries reduce poverty; to lift 100 million Nigerians from poverty in next 10 years, this workshop is very important,” he said.

He said the role of MSMEs in economy’s development could not be underestimated, noting that strong and virile MSMEs would create job opportunities for citizens. He said MSMEs were struggling to survive due to lack of access to finance, which he said is their major hindrance.

“The way to unlock finances for MSMEs is to offer moveable assets as collateral so that finance sector can have confidence in MSMEs. Without your direct help by enabling MSMEs getting finance, we can’t be able to lift 100 million from poverty in next 10 years,” he said.

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