Household goods, crops and livestock will now be used as security against bank loans.
This is after President Uhuru Kenyatta signed into law a bill allowing the use of these commodities as security against loans.
The new law is aimed at helping Kenyans without traditional security items such as logbooks or title deeds access bank loans.
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 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.
However, it remains t be seen how banks will take up this law especially at a time when financial institutions in Kenya have gone cold on issuing new loans as a protest against the enactment of a law capping interest rates last year.
