CERSAI - Central Registry of Securitisation Asset Reconstruction and Security Interest of India

Central Registry of Securitisation Asset Reconstruction and Security Interest of India or CERSAI was created to restrain fraudulent activity in lending transactions against equitable mortgages.

What is CERSAI?

CERSAI also was known as Central Registry of Securitisation Asset Reconstruction and Security Interest of India. CERSAI has been established as a company under section 8 of the Companies Act, 2013 by the Government of India. CERSAI was formed to identify and check fraudulent activity in lending transactions against equitable mortgages. In other words, the CRESAI was established to discourage and prevent the practice of taking out various loans from several banks using the same asset or property.

Major shareholders of the CERSAI are the Central Government of India, National Housing Bank and public sector banks, out of which the central government incidentally holds a 51% share in the company. Before the setting up of Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), a property’s encumbrance details rested solely with the borrower and the lender.

The reason behind this was the disjointed system of registration that was in place at the time. Due to this, persons would take out various loans from several banks using the same asset or property. These loans from banks were obtained using counterfeit title deeds or through other doubtful means of replicating of the original deed. Unfortunately, for genuine buyers, these assets or properties were then sold with unpaid loans still attached to them. It ultimately landed the potential buyers in a soup due to the lack of information about the existing liability of the property/asset.

Registration

• The Registration with CERSAI can be initiated on the official website of CERSAI.
• The person seeking for registration will be required to fill out the registration form electronically available under the ‘Entity Registration’ option on the CERSAI website.
• The user must possess a Digital Signature Certificate (DSC) to gain access to the CERSAI portal and to fill out the relevant details.
• Once all the information required for the registration has been filled in, the same is required to be printed and signed by the authorised signatory.
• These printed forms, along with the all relevant documents as mentioned in the forms are to be sent to the official address of CERSAI.

Accessibility

Any bank, financial institution or an individual can access the registration platform of CERSAI for a certain fee. By registering themselves with CERSAI, the lenders can pull up the information on an asset or property to validate that whether any previous security interest has been created by a different lender ((banks, financial institutions etc.) in the past.

Usually, this is done before the sanction of a loan to a borrower. This is exceptionally beneficial for the genuine buyers of the property, as CERSAI permits them to pull up all the relevant information from the registry to check whether the property in which they are interested in free of any liability that may have been created by another lender.

Main objectives of CERSAI

• To crack down on such fraudulent and dubious activities, Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) was established with the prime objective of maintaining a centralised registry of equitable mortgages.
• It allows financial institutions and banks to register any transactions in respect of asset securitisation as well as reconstruction.
• The scope of CERSAI was further extended in the year 2012; it was extended to include the registration of any security interests that were created via the assignment of factoring or accounts receivables.
• In recent times, the scope of CERSAI was further enlarged to include registration of any security interests that are created on assets not considered to be a tangible asset and to all types of mortgages prevalent in India.

This registration contains all the pertinent information on loans or mortgages that have been taken out on a property or asset. Apart from this, the registration also contains all significant information on the lender that sanctioned the loan on the asset or property as well as information on the borrower of the loan.

As per the Central Government’s directives issued in relation to sanctioning of loans by banks and financial institutions, the lenders of the loan are shall register all information with regards to security interests that they have been created on any asset or property with CERSAI. Such registration is required to be completed within a period not exceeding 30 days from the date of the creation of security interests.