RMA:In a step to create better financial access to micro, small and medium enterprise (MSME) through secure transactions of movable properties, Royal Monetary Authority (RMA) yesterday launched the Central Registry System for secured Transaction (CRST).
It is a “registry for movable properties” established under MSME project, a component of RMA’s ADB project.
RMA’s deputy governor Eden Dema, who was also the project director for CRST said the studies and surveys in the past five to six years had exhibited MSME as providing more employment and significantly contributing to the country’s GDP.
“In all developing countries, MSME contributes to the GDP, and more the developing country it is, more the MSME will contribute,” she said, adding MSME would now be facilitated with financial access.
Lenders, financial institutions today, she said always required collateral to give loans to this sector, which being small lacked fixed assets like building and land to avail loans successfully.
Increasing access to credit to the sector, CRST will also allow more types of movable goods to be used as collateral.
It will also give lenders a greater certainty of where they stand in priority.
If someone needs a loan from a particular lender, the same lender will register with CRST, before giving loans against a borrower’s asset.
While the borrower benefits from the loan, the lenders will benefit in terms of having a secured creditors’ rights.
Creditor’s rights is crucial incase if the loan turns bad.
For example, if a person avails multiple loans from different lenders on the same collateral, the lender, whoever registered first with the CRST will have the priority for security.
“There are so many cases of multiple loans on one collateral because there is no repository or registry of the database,” Eden Dema said, adding there was no entity in the country that had a data of collaterals, except for road safety and land commission.
The CRST system will connect all database of the movable collateral, allowing anyone, irrespective of what assets they held, to come and register with the registry.
CRST will also allow access to information contained in the registry.
“In absence of data, there was no access to find any records if a property in question was in credit already,” Eden Dema said.
Public can request for certified search report from the CRST unit to determine if there is security interest registered against the good that one may be interested to buy.
“More than anything, it will make the transaction very transparent, in terms of the liability of that asset offered for sale,” she said. “If someone finishes paying loan, the registration can be withdrawn and if need be for another loan, it can be registered again anytime.”
Meanwhile, all previous lenders who gave loans on different collaterals have six months to register with the CRST, starting September.
By Rajesh Rai