CERSAI Registration - Definition, Functions & Objectives

Central Registry of Securitisation Asset Reconstruction and Security Interest of India or CERSAI, as it is known in short, was formed in order to control fraudulent activities when it came to loans on equitable mortgages.Before CERSAI, the practice of taking out loans from various banks using the same property or asset as mortgage using counterfeit deeds and papers was quite prevalent. CERSAI was brought into the picture to curb this. Now, all mortgages for loans have to be registered with CERSAI compulsorily and this has led to greater transparency as well as reduced fraudulent loans.Let us have an in-depth look at CERSAI, it’s key functions, benefits etc.

CERSAI, or Central Registry of Securitisation Asset Reconstruction and Security Interest of India, is actually a government company according to Section 8 of the Companies Act, 2013. CERSAI was established to prevent and discourage the illegal practice of taking out loans from different lenders using the same property or asset as a mortgage. Before CERSAI, encumbrance details of a property lied solely with the owner and the lender.Due to this reason, the owner could take out multiple loans using multiple lenders on the same property. This in turn meant that when genuine buyers purchased these properties, they still had unpaid loans attached to them.Now, CERSAI registers every property that is mortgaged and hence one can no longer get a second loan on the same property.The Central Government of India, National Housing Bank and public sector banks are the major shareholders of CERSAI. Out of these, the Central Government of India holds a 51% stake in the company.

The key function of CERSAI is to maintain an online database of loans on movable, immovable and intangible properties and mortgages. This results in transparency for all involved parties regarding a particular property and hence, any discrepancy can be avoided. CERSAI operates and maintains the Central KYC Record Registry and serves theRBI, IRDAI, SEBI and PFRDA.

1. The main objective of CERSAI is to maintain a centralised registry of equitable mortgages in order to crack down on fraudulent property loans taken using counterfeit deeds or multiple loans on the same property.2. It allows financial institutions and banks to register lending transactions related to asset securitisation and reconstruction.3. In the year 2012, the scope of CERSAI was further extended to include the registration of any security interests that were created via the assignment of factoring or accounts receivables.4. The scope of CERSAI was recently even further extended to include registration of any security interests that are created on assets not considered to be a tangible asset (intangible assets) and to all types of mortgages prevalent in India.A CERSAI registration contains all information on loans or mortgages that have been taken out on a property or asset. Additionally, the registration also contains all significant information on both the lender that sanctioned the loan on the asset or property and the borrower who received the loan.

Registration of a lending transaction can be done online on the CERSAI website using the following steps:

• Visit the official CERSAI website.
• Click on ‘Entity Registration’ on the main page from the given menu.
• You can then fill the online registration form. You will also need an electronic signature or Central KYC Record Registry (CKYCRR).
• Once you fill out the forms, print them out and get them signed by an authorised signatory.
• Once you have collected the documents, send them along with the form to the CERSAI office.

A small fee has to be paid for CERSAI registration irrespective of whether your loan is approved or rejected by the lender. The fee can be Rs. 50 or Rs. 100 depending on the loan and property.

For home loans above Rs. 5 lakh, the CERSAI fee is Rs. 100, while for home loans below Rs. 5 lakh, the CERSAI fee is Rs. 50 only.

Any bank, lender or individual can perform a CERSAI search in order to pull out details of a particular property in order to verify whether the property has any loans attached to it. For a small fee, a person can register themselves on CERSAI and find out whether a property they’re about to buy was previously registered for a loan. Lenders, too, can use this feature to find out if properties have existing loans from different lenders.

Whenever a lending transaction between a borrower and lender happens against a mortgaged property or asset, details of the same have to be registered with CERSAI, which then updates it’s database with the particulars of the transaction. It is the lender's responsibility to send the data within 30 days of the transaction or else incur monetary penalties.