In Summary
  • The Movable Property Security Rights Act 2017 paves the way for the formation of a centralised electronic registry for mobile assets that financial institutions can use to verify the security offered.
  • Banks have traditionally not accepted movable assets as loan collaterals because of lack of a central database they could log into and make a claim on an asset attached to a loan.

President Uhuru Kenyatta has signed into law a Bill allowing borrowers to use household goods, crops, live animals and even intellectual property to secure commercial loans in a move aimed at boosting access to credit.

The Movable Property Security Rights Act 2017 paves the way for the formation of a centralised electronic registry for mobile assets that financial institutions can use to verify the security offered.

The new law is meant to help bank customers without common and costly forms of collateral such as motor vehicles (logbook) or land (title deed) to access credit.

“The Act promotes consistency and certainty in securing financing relating to movable assets,” the President said in a brief announcing the Bill’s signing into law.

The new law will be used to establish an Office of Registrar and the appointment of a registrar to “receive, store and make accessible to the public information on registered notices with respect to security rights.”

These rights, which also include deposit accounts and electronic securities, will be listed in the registry using a unique identification number that allows tracking of those that have been used to secure bank loans or collateral.

Banks have traditionally not accepted movable assets as loan collaterals because of lack of a central database they could log into and make a claim on an asset attached to a loan.

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