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CERSAI Registration for NBFC: Requirements and Procedure

Swetha Dhinesh
07 Jul, 2023 07 Jul, 2023
CERSAI Registration for NBFC

For growth and economic development, businesses borrow money or take credit for scaling the businesses to their potential. To bring money to the firm, they look for a secured lender. The CERSAI was brought to check the fraudulent activities in the lending transaction against the same source (mortgage by deposit of title deeds), and all the lending documents rested solely between the lender and the borrower; this led to financial scams and falsification of the original deed as multiple checks were not in place.

What Is CERSAI?

CERSAI stands for Central Registry of Securitisation Asset Reconstruction and Security Interest of India. CERSAI was set up under section 20(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002)[1]. The government of India holds the majority of shares, i.e. 51% in CERSAI. The body was established to curb the practice of borrowing multiple loans against the same property as security and store and maintain the records of loans issued against all types of mortgages.

Objective and Applicability of CERSAI

The main objective of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India are:

  • CERSAI was set up to maintain and operate the central registration system for security interests generated over fair and equitable mortgages (mortgage by deposit of title deeds) to prevent fraudulent activities and financial scams.
  • CERSAI permits financial institutions like NBFCs or Banks to register all kinds of transactions related to the securitisation and reconstruction of assets.
  • In 2012, the scope of CERSAI was further extended through the Factoring Regulation Act 2011, which mandated the registration of any security interests created through the assignment of factoring and account receivables.
  • Any security interests or loans created on non-tangible assets and all types of mortgages prevalent in India must be registered with CERSAI providing all the information related to secure guarantees. All lenders must complete registration within 30 days of realising the security interests.
  • Any person can search and investigate the records maintained under CERSAI by making prescribed payments under Central Registry Rules, 2011.
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Eligibility Requirement for CERSAI Registration Of NBFC

Some of the following entities that are eligible for CERSAI registration (post implementation of chapter IV-A of the SARFAESI Act) are listed below:

  • All financial institutions in India(All scheduled commercial banks, NBFCs, Small Finance Banks, and cooperative banks) must register and update CERSAI.
  • All the secured creditors can be eligible entities- Public Sector Banks, Private Sector Banks, Non-Banking Financial Companies (NBFC Accepting Public Deposit and NBFC Not Accepting Public Deposit), Security Trustees, Regional Rural Banks, Housing Finance Companies, Cooperative Banks, Asset Reconstruction Companies, Factoring Companies, and Revenue Authorities etc.
  • Individuals, Sole Proprietorships, Body of Individuals (BOI), and HUFs are other creditors eligible for registration.

Procedure for CERSAI Registration of NBFC

Every NBFC must obtain a Certificate of Registration Compliance from RBI and register with authorities like CERSAI, Intelligence Unit, Finance Intelligence Unit-IND, etc., to curb the instances of financial scams and money laundering.

In 2013, RBI released a notification on filing records of equitable mortgages with the Central Registry (centralise database), which mandated all financial institutes, including NBFCs, are advised to file and register all the equitable mortgages, immovable property, hypothecation or any other property (non-tangible) created in favour of NBFC post 31st March 2011 and maintain all the future security interest created in favour of NBFC with CERSAI. With some changes, an upgraded version of CERSAI 2.0 was released on 3rd August 2020.

The Government of India has prescribed forms for CERSAI registration for NBFC as follows:-

Process for Registration Prescribed Forms
For creation and modification of Charge (only immovable property)FORM I
For particulars of Satisfaction of Security Interest FORM II
For Reconstruction or Securitisation of Assets FORM III
For Satisfaction of Securitisation or Reconstruction of AssetsFORM IV

Please refer to the table for the prescribed fee as per the nature of transactions:-

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Serial No.Nature of Transaction for CERSAI RegistrationPrescribed FeeFORM No.
1Creation or modification of Security Interest in favour of secured lendersRs.100 for a loan above Rs.5 lakhs, and a loan upto Rs.5 lakhs, the fee would be Rs. 50FORM I
2Satisfaction of any existing Security Interest–FORM II
3Particulars of Securitisation or reconstruction of financial assetsRs.500FORM III
4Satisfaction of securitisation or reconstruction of financial transactionsRs.50FORM IV
5Application for search for information maintained in CERSAIRs.10 
6Assignment of ReceivablesIf the assignment of receivables of less than Rs.5 lakh, then the application fee would be RS. 10, and for assignment of receivables of Rs.5 lakh and above, the fee would be Rs.100 
7Satisfaction of registration on the realisation of the receivables— 
8Application for Assignment of Receivables Registration (0-10 days)Standard Fees 
9Application for Assignment of Receivables Registration (10-20 days)Standard Fees +Ten times the basic fee as applicable. 
10Application for Assignment of Receivables(beyond 20 days)Standard Fees +Ten times the basic fee, as applicable and (condonation of delay) government approval is required 

Process of CERSAI Registration for NBFC

The process of NBFC registration on the CERSAI portal is easy. The applicant must have Digital Signature Certificate before accessing the portal. For registration on the CERSAI portal, the following are the steps:

  • Step 1: Entity Registration tab on the CERSAI Portal1
  • Step 2: Fill in the details required for  Entity Registration
  • Step 3: Select the Mode of Entity Registration; two modes
    • CKYC or Digital Signature Certificate (a valid Class III digital signature).
  • Fill in details such as CKYC number, Date of Birth, and Mobile no. Address etc.
  • Step 4: Submit the Registration Form
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Conclusion

From the above, all the NBFCs are required to report the creation of security interests with CERSAI within the specified time limit. The CERSAI registration for NBFC is mandatory for all financial institutes to file records with the central registry (database) created in their favour whether or not they are notified under the SARFAESI Act 2002.

FAQ

What is the meaning of CERSAI Registration?

The Central Registry of Securitization Asset Reconstruction and Security Interest of India, or CERSAI, was established by the Government of India under Section 8 of the Companies Act 2013 with the goal of exposing any fraudulent activity when any movable property is used as collateral to obtain a loan or in the mortgage.

Does CERSAI levy any charges for registration?

For the registration of security interests, it charges a fee. CERSAI registration fees range from Rs.50 to Rs.100. The costs are determined by the amount of money borrowed and used to purchase the property.

What if CERSAI is not registered?

Even sincere buyers were unaware of the loans and responsibilities connected with a property in the absence of CERSAI. It caused legal difficulties and problems for those who purchased such houses.

IS registration charges on CERSAI mandatory?

They need to check the CERSAI database records to ensure the property is liability-free. The borrower of a home loan is required to pay a charge to the lender for this purpose. Even if the lender rejects the house loan application, the applicant is still obligated to pay the CERSAI fees.

Why is registration for CERSAI necessary?

The CERSAI’s objective is to maintain a central registry of equitable mortgages in order to combat fraudulent real estate loans made using fake deeds or multiple loans on the same property.

What is the threshold limit for CERSAI registration?

Entities will establish a threshold limit for the balance in their CERSAI accounts based on the anticipated volume of transactions. The system will notify them if the balance drops below the predetermined level. Transactions are allowed until there is no balance left on the account.

What is the CERSAI registration period?

All lenders (banks, financial institutions, etc.) are required by the government-issued order to register with CERSAI all information pertaining to the produced concrete guarantees. After the realisation of the security interest, the registration must be finished within 30 days.

Read our Article: What is a Non Banking Financial Company (NBFC)?

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References

  1. https://www.cersai.org.in/CERSAI/home.prg

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