CBN Releases Collateral Registry Regulation

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Tuesday, September 30, 2014 11.54 AM/ CBN

The Central Bank of Nigeria (“The Bank”) is the public institution with the statutory responsibility for, amongst others, the promotion of a sound financial system in the country. Section 1 (2) of the Central Bank of Nigeria Act No. 7 of 2007 details the principal objectives of the Bank.

The Banks and Other Financial Institutions Act, Cap B3 - LFN 2004 (BOFIA) (as amended) is the primary legislation for regulating banking, banks and other financial institutions in Nigeria. Section 57 of the said BOFIA authorizes the Governor of the Central Bank of Nigeria to “make regulations to give full effect to the objects and objectives of the Act‟ as well as those for the operation and control of all institutions under the supervision of the Bank.

Section 1(4) of the Banks and Other Financial Institutions Act (as amended) also empowers the Central Bank of Nigeria either generally or in any particular case to appoint any person who is not an officer or employee of the Bank to render such assistance as it may specify in the exercise of its powers, the performance of its functions or the discharge of its duties, or on its behalf of and in the name of Central Bank of Nigeria.

In furtherance of the aforesaid mandates and in order to improve access to finance for micro, small and medium enterprises (”MSMEs‟) while maintaining a strong prudent lending policy, the Governor of the Central Bank of Nigeria, in exercise of the powers conferred on him in that behalf, hereby makes these Regulations for the establishment, maintenance and operation of the Collateral Registry and ancillary matters appertaining thereto.

Introduction

 

1. Objective

(1) These Regulations provide a regulatory framework for:

(a) accessing credit secured with movable property,

(b) creation and perfection of security interests,

(c) realization of security interests in movables

(2) The Regulations also provides for the establishment and operations of the Collateral Registry.

(3) The Regulations aim to stimulate responsible lending to micro, small and medium enterprises (MSMEs) by providing a mechanism for efficient registration of security interests in movable property and realization of such interests in the event of a default.


2. Definitions

(1) In these Regulations:

“account receivable” means a right to receive value arising from an obligation owed by a third party to the debtor including book debts but excluding a negotiable instrument;

“amendment” means a modification of information contained in a registration;

“collateral” means movable property, whether tangible or intangible, that is subject to a security interest;

“consumer goods” means goods that the debtor uses or intends to use primarily for personal, family or household purpose;

“debtor” means a person that has rights in the collateral, and includes a grantor of any type of charge, chattel mortgage, pledge or lien in movable property;

 

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