Kenyans seeking credit facilities from banks can now use live animals, crops, household goods, and intellectual property to secure commercial loans.
This is after President Uhuru Kenyatta signed The Movable Property Security Rights Bill into law.
It seeks to open up the banking sector by cardinally tapping on movable assets which have previously not been used to secure loans.
Customers who now seek commercial loans will have it easy as opposed to earlier on when banks would only allow vehicle logbooks or land title deed as the only forms of collateral to access a loan.
Uhuru shortly after signing the bill noted that it will transform Kenya’s credit sector in a big way.
“The act promotes consistency and certainty in securing financing relating to moveable assets,” he said as told by Daily Nation.
The new law will have a centralized electronic registry for mobile assets set up to ease the wok of financiers who can verify at any time the type of security offered.
It will also establish the office of the Registrar tasked with receiving, storing and informing the public on registered notices in regard to security rights which include deposit accounts and electronic securities.
Banks have not been allowing the use of moveable assets to secure loans because they did not have a mechanism to make a claim on an asset attached to the loan which makes it easy to transfer between two people.
However, the government still has a daunting task of coming up with regulations which shows clearly the minimum value of assets to be listed and how their existence can be verified.