Central Registry for Secured Transaction

The Royal Government of Bhutan has a Micro, Small and Medium Enterprise (MSME) Sector Development Program (SDP) with the Asian Development Bank (ADB). The overall objective of the MSME SDP is to promote the expansion and growth of a vibrant MSME sector and encourage private sector development for broad based, sustainable economic growth and employment. The Grant Agreement for the Micro, Small and Medium Enterprise Sector Development Program (MSME SDP BHU 39221) was signed between the Royal Government of Bhutan and Asian Development Bank on 19th February 2008 in Thimphu.

The Project has 3 sub projects.

Sub project 1: Increase access to market – based finance,

Sub project 2: Enhance Business Development Services and

Sub project 3: Program Implementation and Institutional Capacity Building.

Under the sub project 3: there are four components. The component 3: Establishment of a Central Registry is to encourage secured transactions and improve the use of collateral's, the MSME SDP will set up a Central Registry, and where mortgages and other security interest in movable property can be registered for collateralize. A registry is also important for monitoring and securing “lender – borrower / creditors – debtor” transactions, facilitate credit information sharing and therefore, effectively improve access to credit businesses. Therefore, secured transaction was to be implemented by RMA.

Central Registry was launched in August 2013 and went live in July 2014. After the system went live the financial institutions were provided with 6 months for the data entry where they initially started with the vehicle registration for the first three months and other movable collateral in the remaining three months. The fees were applicable only for the loans given after June 30th 2014 by the financial institutions.

Central Registry’s Mission

The fundamental mission of the Central Registry Office is to receive, maintain and disseminate information to

(a) Enable creditors to make informed business decisions about lending secured by movable property and

(b) Secure the priority of an encumbrance of a creditor in a debtor’s movable property against buyers, other creditors and insolvency of the debtor

1. Functions of Central Registry

The Central Registry acts as a single, centralized repository for all security interests on movable goods.

These are essential purposes served by a CR which are as follows:

To make information available to the public on secured transactions on movable property only.

To determine the priority of conflicting claims over the same property subject to multiple security.

provide a public service to anyone wishing to make inquiries of possible existing relationship between a creditor and a debtor as it relates to movable collateral

4. Respond to inquiries, collect and reconcile fees, provide assistance to when required, issue
all within the prescribed time frame as set out in the Statute.

5. oversee the administration of the secured transactions law in other jurisdictions

6. keep current with best practices in the area of electronic registries

7. provide information and training to users of the system, and other public institutions,

8. maintain and refine further development of legal framework and Registry operations

The Central registry provides notice to potential lenders of credit of all the debtor’s prior security interests in movable property.