The Federal Document Authentication & Registration Agency (DARA) resumes validation services for loans. DARA’s announcement signals banks to resume processing loan requests.
Effective as of today, the measure will enable businesses process collateralized loans, a service that was unavailable for almost four months.
Commercial banks were not providing loans since August 2021 after the National Bank of Ethiopia (NBE) decided to put a freezing order on asset-based loans. Similarly, the agency also suspended its services since august 2021.
Though an exemption has been made to some sectors, including those involved in the exports of sesame and khat, NBE’s suspension was fully lifted this week.
However, providing new loans has not been possible because of suspension of land-related services and authentication of new credit. As a result, DARA resumed loan validation services in an effort to reboot disbursement of fresh loans and economic activities. Commercial banks, whose over 70 percent of profit comes from loan interest, have been embattled for the past four months. During the fourth quarter of 2020/21, amount of disbursed loan jumped to 106 billion Birr, from 68 billion Birr in the third quarter, according to NBE report. Alarmed by the sudden surge, the government decided to suspend loans.
DARA provides document authentication and registration services for house, vehicles, land, and share related assets. Transactions and transfers are invalid without such validation. The government suspended activities such as issuance of ID and ownership certificates in a bid to deter fraud and financial supports for the outlawed TPLF. For now, the agency is allowed to resume only loan validation while the rest of the services it provided remain suspended for indefinite time.
“We are yet to receive an instruction from Addis Ababa City Administration to facilitate transactions involving properties,” said Muluken Amare, Director General of the Agency.
Businesses borrowing over 500 Birr in loans are required to authenticate their agreement before a notary officer at the Agency. A new draft directive will raise the amount to 25,000 Birr.