GETTING CREDIT

Making Access To Credit Easier

In order to boost access to credit by SMEs in Nigeria, the Credit Reporting Act of 2017 and the Secured Transactions in Movable Assets Act 2017, were passed. The Secured Transactions in Movable Assets Act 2017 enables SMEs to use movable assets (Vehicles, farm equipment, jewellery, machinery) as collateral to get a loan from banks. The passage of Credit Reporting Act of 2017 gives borrowers the legal right to access credit data from credit bureaus who provide credit scores for banks and other financial institutions.

Reforms implemented for the ease of getting credit

Creation of National Collateral Registry (NCR) to support the use of movable assets


Impact

  • SMEs can now use movable assets as collateral for loans such as motor vehicles, machinery, inventory, even jewelry.
  • Lenders can easily access all the required information on the NCR via the web platform.
  • Lenders can show their interest in an asset and have knowledge of it, if the same asset is already in use as collateral for another loan.
  • Reduced incidence of defaults by eliminating serial defaulters.
  • Reduced cost of verifying borrowers to lenders by 35% leading to reduced cost of credit and defaults on loans.

Creation of National Collateral Registry (NCR) to support the use of movable assets.

Passage of the Credit Bureau Act 2017

Impact

Value of reforms



Value of reforms to SMEs (Borrowers)

  • Movable assets can now be used as collateral as compared to the requirement of only immovable property as collateral.
  • Elimination of the requirement to submit the original or copy of security agreement or any other documentation.
  • Reduced cost of verifying borrowers to lenders by 35% leading to reduced cost of credit and defaults on loans.
  • Increased access to finance
  • Assets are closer to cash (e.g. accounts receivables) and are non-possessory (the physical asset remains in possession of the borrower to continue their business as proceeds from the usage of the asset will be used to repay the loan)
  • Borrowers can show their credit-worthiness and build their credit rating

Value of reforms on Financial Institutions and Banks (Lenders)

  • Lenders can now show their interests on an asset and be aware if the same asset is already in use as collateral for another loan via the registry database
  • The status of movable assets that have been used as collateral is now accessible online to reduce incidence of fraud
  • Reduced incidence of defaults by eliminating serial defaulters
  • Higher rate of loan recovery and lowers the risk for secured creditors
  • Asset diversification by spreading risk and providing banks with profitable lending opportunities in the SME sector
  • Assurance that lenders can enforce rights and collect a debt or repossess collateral through a timely and inexpensive process
  • The lender (also known as Secured creditor) is paid first in event there is liquidation/winding up of the borrower’s company


REFORM OUTCOMES As of December 31 2018

The NCR had registered 628 financial institutions, including 551 microfinance banks and 21 Deposit Money Banks.

Registered collaterals had increased to 58,843 with 39,786 financing statements valued at N1.23 trillion, US$1.14bn and €6,08m.

Over 16,500 searches had been conducted on the NCR portal.

Reforms to be implemented

Unification of CAC and NCR database through an automated interface following the Secured Transactions in Moveable Assets Act


Impact

  • Data on movable assets in the CAC database will now be only accessible through the NCR portal to avoid having multiple registries
  • The NCR will become the sole registry where lenders can search for transactions on movable assets, in line with global standards.

Unification of CAC and NCR database through an automated interface following the Secured Transactions in Moveable Assets Act

Strengthening the legal rights of lenders as provided in the Companies and Allied Matters Act (CAMA) Repeal and Re-enactment Bill 2018 when passed


Impact

  • Secured creditors interests are now been further protected because the secured creditor is paid first in case of winding up of a business/asset.
  • Secured creditors are subject to an automatic stay of 6 months on enforcement when a debtor enters a court-supervised reorganization procedure
  • Secured creditor now has grounds to proceed with the sale of collateral.
  • Secured creditor now has grounds to proceed with the sale of collateral, notwithstanding a stay of execution in the case of a winding up
  • An application can be filed within 30 days of notice of the arrangement

Strengthening the legal rights of lenders as provided in the Companies and Allied Matters Act (CAMA) Repeal and Re-enactment Bill 2018 when passed

About the NCR

The National Collateral Registry of Nigeria is an initiative of the Central Bank of Nigeria (with the support of the International Finance Corporation) to improve access to finance particularly for MSMEs.

The NCR handles both incorporated and non-incorporated entities (such as associations). The database of the NCR stores information for the whole economy and is stored electronically and publicly accessible to registrants and searchers. The registry covers all types of security rights in movable assets such as machines, inventory, tangible assets and receivables which are most likely owned by small businesses.

The electronic database is filed by debtor’s name or a unique identifier (e.g. unique number)

Download NCR Manual

Steps to register collateral by financial institutions and banks with National Collateral Registry (NCR)

Create an Account

*Financial institutions and banks are required to create a client account on the National Collateral Registry of Nigeria (NCR) website before being able to register a financing statement. The steps are as follows:

  • Go to the National Collateral Registry (NCR) website – www.ncr.gov.ng
  • Click on the “create account” button which opens a verification page
  • Enter BVN in the box and click submit
  • After authentication and approval of the BVN, the Secured Creditor Profile page opens
  • Enter your institution profile in the Secured Creditor Profile form taking note of the mandatory fields
  • Move to the Administrator Account Profile Section and fill the Administrator Account Profile form
  • Complete the Administrator Profile and then move to the Security Check section
  • Clicking on the Submit button displays the Review Secured Creditor Registration Information page.
  • Verify to confirm the information on the page is accurate.
  • Click the “Submit Registration” button to submit client account registration request for approval or click on the “cancel” button to cancel the request and return to the previous page.
  • When your account request is approved by the Registry, the link to activate the account will be sent to the email address you provided under the Administrator Account Profile form.
  • To access your client account click on the link.

Create a financial statement

*To create a financing statement, the financial institution must already have an account with the National Collateral Registry (NCR) and have adequate funds in their wallet as registering a financing statement attracts a charge. The steps are as follows:

  • Login into the application with your Login id and Password and click on the Financing Statement menu tab
  • Select Create New Financing Statement from the drop down list
  • Fill the mandatory boxes as required on the Loan Information form
  • Move to the Registration Information section/tab and click on the Secured Creditor tab. The Secured Creditor profile details captured at the time the account setup is displayed.
  • If there are two or more secured creditors, add secured creditors by clicking the appropriate button below the page depending on what is needed. Click on the “Add Secured Creditor” button to open the Add New Secured Creditor page.
  • Click on the “Debtor” tab and select the appropriate debtor type (–Individual or Institutional) button to add Debtor details
  • Click on the “Collateral” tab to add the Collateral details.
  • Select Collateral type from the drop down list and enter the Serial Number (for Planes, Boats, Motor Vehicles, Plant and Machinery collaterals) and description of the collateral in the Serial No. and Description boxes respectively.
  • To add more collateral, click on the “Add New Collateral” button.
  • You may add a file attachment (in Word or PDF formats) to the financing statement by clicking on the Add File button.
  • Click the acknowledgement box
  • To complete, click on the Submit Financing Statement button and submit.
  • Upon successful submission of the financing statement for registration, a confirmation message with a summary view of the financing statement as shown below is displayed for your preview.

Steps to accessing credit/loan with moveable assets

  • Borrower seeks credit with moveable asset which must have been insured
  • Lender proceeds to search the registry database using a unique identification to ensure the assured asset has not been previously used for another loan
  • Lender files a financial statement on the National Collateral Registry (NCR) website and registers an interest in the asset used as collateral
  • Loan is then made available to borrower by lender
  • Once borrower has made loan repayment, the lender frees the movable asset of the borrower from any burden within fifteen (15) working days

National Collateral Registry (NCR)

Website - www.ncr.gov.ng

Office address - National Collateral Registry, 1581 Tigris Crescent, Maitama, Abuja

Phone - +234 2793970

Email - info@ncr.gov.ng

Central Bank of Nigeria (CBN)

Website - www.cbn.gov.ng

Office address - P.M.B, Intelligent Building, 187 Abuja Tafawa Balewa Way, Central Business District, Abuja.

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