Thu | Jan 24, 2019

Collateral roadblock - NSIPP registry has limited influence on risk-averse lenders

Published:Sunday | September 21, 2014 | 12:00 AM

Avia Collinder, Business Reporter

Judith Ramlogan, the chief executive officer (CEO) of the Companies Office of Jamaica (COJ) and registrar of companies, says new state-run collateral registry, the National Security Interests in Personal Property Registry (NSIPP), is yet to persuade the banks and other major issuers of credit to liberalise their lending policies.

The NSIPP is intended to provide a database of liens and claims against movable collateral.

The registry, which is operated by the Companies Office, went live on January 2. Eight months later, at the end of August, some 128 lenders had registered 100,658 notices regarding collateral offered up as security.

The 128 subscribers, as the Companies Office refers to users of the registry, are made up of banks, credit unions and other lenders, as well as three hire-purchase companies. Ramlogan says some of the subscribers are individual officers of lending institutions.

Risk assessment

The registry is meant to assist with risk assessment of small borrowers. It is meant to develop into a central datapoint for assessing whether collateral offered up as security is unencumbered by other debt, and, as such, open up access to credit, especially for the MSME sector.

Ramlogan says the longetivity of the registry and its effectiveness ride on the willingness of big lenders to change their mindset on small-business lending.

"Those institutions have to be made to see the benefit of making loans to persons who may not have real property (land) but have some form of personal property which could be used as collateral instead. If financial institutions lend only in instances where the loans are secured by real property, then there will be no need for the NSIPP registry," she said.

The companies registrar said she would like to see lenders who were more open and accommodative of the wide range of non-real property owned by Jamaicans, including consumer goods, livestock, crops, equipment, present and future receivables, stocks and bonds and intellectual property.

These, she said, could be used as collateral now that registry is in place.

She adds that 80 per cent of notices are registered against motor vehicles as collateral.

The NSIPP replaces the older Registry of Charges that was established under the Companies Act of 2004. NSIPP itself was ushered in under the Security in Personal Interests Property Act of 2013.

Its subscribers can be individuals, companies, statutory bodies, government departments, government agencies and other corporate bodies, but is mainly used currently by financial institutions.

The registry now holds information on non-real estate assets tendered as collateral for securing loans. It costs about $1,500 to register each notice.

Another roadblock to NSIPP, Ramlogan said, was the inability of administrators to "persuade hire purchase companies such as Courts and Singer to register furniture and equipment they have sold to customers on hire-purchase terms."

And, the general public appears not to know, she said, that "anyone who makes a loan which is secured by personal property may register that interest on the NSIPP registry."

NSIPP is an online registry, whose - notices can be viewed by anyone. Searches of the registry are free. However, only the lender or subscriber who registered the original notice can alter or edit

the information, said the Companies Registrar.

To generate awareness of the registry, the Companies Office ran a "small" public campaign earlier this year, funded through Compete Caribbean, an IDB-backed programme.

"The COJ, with its small resources, will have to continue to sensitise the public with regard to the SIPP legislation and the NSIPP Registry," she said.

Certified search reports and extracts of the database will attract fees, but most of the charges are below the $1,500 cost to register notices, Ramlogan said.

A breakout of the types and categories of items registered by lenders as well as their approximate value would have to be mined from the database and was unavailable.

"The developer of the registry site has been requested to provide those reports in the future," Ramlogan said.