NBFC sector is becoming nowadays a very popular and economically very stable, firstly we should...
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.
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). 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 mortgage.
The main objective of for Central Registry of Securitisation Asset Reconstruction and Security Interest of India are:
Some of the following entities that are eligible for CERSAI registration (post implementation of chapter IV-A of SARFAESI Act) are listed below:
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.An upgraded version of CERSAI 2.0 was released on 3rd August 2020 with some changes.
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 Assets||FORM IV|
Please refer to the table for the prescribed fee as per the nature of transactions:-
|Serial No.||Nature of Transaction for CERSAI Registration||Prescribed Fee||FORM No.|
|1||Creation or modification of Security Interest in favour of secured lenders||Rs.100 for a loan above Rs.5 lakhs, and a loan upto Rs.5 lakhs, the fee would be Rs. 50||FORM I|
|2||Satisfaction of any existing Security Interest||–||FORM II|
|3||Particulars of Securitisation or reconstruction of financial assets||Rs.500||FORM III|
|4||Satisfaction of securitisation or reconstruction of financial transactions||Rs.50||FORM IV|
|5||Application for search for information maintained in CERSAI||Rs.10|
|6||Assignment of Receivables||If 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|
|7||Satisfaction of registration on the realisation of the receivables||—|
|8||Application for Assignment of Receivables Registration (0-10 days)||Standard Fees|
|9||Application for Assignment of Receivables Registration (10-20 days)||Standard Fees +Ten times the basic fee as applicable.|
|10||Application for Assignment of Receivables(beyond 20 days)||Standard Fees +Ten times the basic fee, as applicable and (condonation of delay) government approval is required|
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:
From above we can conclude that all the NBFCs are required to report the creation of security interests with CERSAI within 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.
Read our Article: What is a Non Banking Financial Company (NBFC)?