NBFC

CERSAI Registration for NBFC: Requirements and Procedure

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.

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 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

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

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

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

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