CERSAI is India’s main online security interest registry company. It was primarily designed to prevent lending against equitable mortgage fraud, in which people took multiple loans on the same asset from different banks.
The company was formed with a majority shareholding of 51% from the Central Government, Public Sector Banks, and the National Housing Bank, which were licensed under Section 8 of the Companies Act, 2013. The CERSAI Portal is accessible to both financial institutions and the general public. However, the general public can only access information about equitable mortgages.
Some information about the CERSAI
Type – Public Sector
Headquarters – New Delhi
Industry – Financial Infrastructure
Founded – On March 11, 2011
Area Served – India
Products – Online Security Interest Registry
Owners – The Government of India, National Housing Banks, and Others
Key functions and objectives
- The company’s purpose is to maintain and operate a registration system for the purpose of registering securitization transactions, asset reconstruction of financial assets, and the creation of security interests over property, as contemplated by the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
- CERSAI was established to keep a central registry of equitable mortgages or collateral. It includes information about the property used as collateral, the name of the financial institution that provided the credit, and the borrower’s contact information.
- The CERSAI portal enables lenders (public sector banks and non-banking financial companies) to determine whether the property against which they are disbursing the loan is not being used as collateral for another bank’s loan.
- Even if the property is used as collateral elsewhere, banking institutions can determine whether the value of the property is sufficient to extend another loan.
- The CERSAI portal enables homebuyers to determine whether the property they intend to purchase is free of all liabilities and security interests.
- The Factoring Act of 2012 changed the scope of the CERSAI in 2012. Through this act, the CERSAI began the registration of security interests created through factoring or account receivables.
- Its scope was expanded in 2016. The CERSAI is required by this amendment to begin registering security interests created on movable and intangible assets such as book debt, hypothecation, and accounts receivable.
- The CERSAI is tasked with registering all types of mortgages used in India.
The Ultimate Guide to When It Is Needed
In the absence of CERSAI (Cersai Login), even genuine buyers were unaware of the loans and liabilities associated with a property. It resulted in legal complications and hardships for buyers of such properties.
Prior to CERSAI, financial institutions had a difficult time learning about encumbrances on a property. Because of the fragmented registration mechanism, it was difficult to determine whether the property was mortgaged or not, and this information was only available to the property owner.
How can the CERSAI Portal assist homebuyers?
Prior to the passage of the Real Estate (Regulation and Development) Act in 2016, the options for property and real estate developer verification were limited. Homebuyers were duped under the guise of false promises and deceptive practices.
However, now that the CERSAI portal has been launched, prospective homebuyers can check to see if the property they have shortlisted is free of any liabilities or has not been used as collateral for a loan. It not only saves homebuyers money but also prevents them from having to deal with time-consuming legal issues in the future.
For the registration of security interests, it charges a certain fee. The cost to register with CERSAI ranges from ₹50 to ₹100. The fees are based on how much money has been borrowed and applied to the property.
How does CERSAI Search work?
A prospective buyer can conduct a CERSAI search to be extra certain due to the rising incidence of using the same property as collateral for loans from various banks. A CERSAI search will list a property’s specifics and reveal whether it has been mortgaged against a loan.
A CERSAI search can be done by logging into the CERSAI Portal and choosing the “Public Search” tab from the home page.
The following methods are available for CERSAI search:
- Asset-based research
- Debtor-based research
- AOR-based research
What is the threshold warning limit in CERSAI?
Depending on the anticipated number of transactions, entities will set a threshold limit for the balance in their CERSAI accounts. In the event that the balance falls below the threshold, the system will alert them. Transactions are permitted up until the account balance is NIL.
CERSAI registration process
Its registration process is fairly easy to complete and only requires a few steps.
- Visit the CERSAI website. It will look like the given image below, which is available at https://www.cersai.org.in/CERSAI/home.prg.
- The primary header bar contains entity registration
- The following step is to complete the online registration form. The main selection header has the heading “Entity Registration” in it.
- Make sure you have a Central KYC Record Registry or an electronic signature to finish the process (CKYCRR). This guarantees timely work and is safe during the pandemic era.
- Now complete the form by entering the necessary data.
- Print out all the forms, double-check the information, and have the designated signatory sign them.
- After that, these forms must be sent to the CERSAI office along with the aforementioned documents.
The Bombay High Court declares that, according to SARFAESI and the RDDB Act, when enforcing a security interest, secured creditors’ claims will take precedence over those of taxing and revenue authorities.