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Operationalization of Movable Collateral Registry (Directive No. 92/2020)

National Bank Of Ethiopia92/2020

Summary

This directive operationalizes the Movable Collateral Registry, establishing rules and procedures for its use in facilitating secured transactions using movable assets as collateral. It details requirements for registration, user accounts, fees, and specific obligations for financial institutions regarding credit allocation.

Who's affected

Banks, Microfinance Institutions, Capital Goods Finance Companies, and any individual or entity using movable property as collateral for credit.

Action required

Financial institutions must formulate policies, assign administrators and security administrators, register for user accounts, and comply with credit allocation targets. Other users must register for user accounts and pay applicable fees.

Key points

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  • Establishes the Movable Collateral Registry.
  • Defines terms related to secured transactions and movable property.
  • Outlines requirements for accessing and using the registry.
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    • Specifies fees for registration and extensions.
    • Mandates credit allocation targets for banks and microfinance institutions.
    • Sets penalties for non-compliance.
    • Provides identifiers for grantors and secured creditors.
    • Details the description of collateral and statistical information requirements.

Requirements

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  • Formulation of clear policies and procedures for secured transactions by financial institutions.
  • Assignment of Administrators and Security Administrators by financial institutions.
  • Obtaining a User Account by secured creditors or authorized representatives.
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    • Acceptance of terms and conditions for using the Collateral Registry.
    • Application and completion of electronic forms for user accounts.
    • Provision of grantor and secured creditor identifiers (TIN, Passport Number, etc.).
    • Provision of addresses for grantors and secured creditors.
    • Reasonable identification of collateral.
    • Inclusion of statistical information in initial notices (business size, type, women's ownership).
    • Financial institutions to allocate at least 5% of credit disbursement to individuals, agricultural sector, and MSMEs against movable property as collateral.
    • Quarterly information submission by banks and microfinance institutions on fund allocation.

Rights and permissions

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  • Right to use movable assets as security for credit.
  • Right to access and use the Collateral Registry upon fulfilling requirements.
  • Right to obtain a search certificate from the Collateral Registry.
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    • Right to access services of the Collateral Registry 24/7, with possible temporary suspension for maintenance.
    • Exemption from certain fees for ninety (90) days from the directive's effective date.

Restrictions

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  • Access to the Collateral Registry requires a User Account approved by the Movable Collateral Registry Office.
  • User account holders must safeguard their passwords.
  • User account holders are responsible for all transactions done through their account.
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    • Access to and use of the Collateral Registry must comply with strict data access procedures.
    • Inaccurate, misleading, or incomplete information registration may result in liabilities.
    • Communication with the Collateral Registry is primarily electronic and automated.

Penalties

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  • Financial institutions that fail to comply with any provision of this Directive shall pay a penalty of Birr 10,000 for each violation.
  • A bank failing to meet credit disbursement targets must double the allocation in the subsequent year.
  • If a bank still fails to comply after doubling allocation, the National Bank shall take appropriate actions.

Objectives

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  • To enable individuals and entities to use movable assets as security for credit.
  • To expand investments and create job opportunities through enhanced access to finance.
  • To establish a comprehensive electronic registration regime for secured transactions in movable property.
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    • To ensure the publicity and effectiveness of security rights through efficient enforcement mechanisms.
    • To facilitate the creation of security rights in current and future movable property.

Organizations

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  • National Bank of Ethiopia
  • Movable Collateral Registry Office

Legal references

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  • Movable Property Security Right Proclamation No. 1147/2019, Article 94(2)
  • Movable Property Security Right Proclamation No. 1147/2019, Article 95
  • Movable Property Security Right Proclamation No. 1147/2019, Article 2(27)
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    • Movable Property Security Right Proclamation No. 1147/2019, Article 24(4)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 25(3)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 33(1)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 38(1)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 28
    • Movable Property Security Right Proclamation No. 1147/2019, Article 29
    • Movable Property Security Right Proclamation No. 1147/2019, Article 27(1)(c)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 2(46)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 27(1)(f)
    • Movable Property Security Right Proclamation No. 1147/2019, Article 16
    • Movable Property Security Right Proclamation No. 1147/2019, Article 92
Original sourcehttps://justice.gov.et/en/directives/operattionalization-of-movable-collateral-registry-directive-no-92-2020/
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