What changed
Government established CERSAI as a Section 25 company to operate the Central Registry under SARFAESI Act. Initially, transactions related to securitization, reconstruction, and mortgage by deposit of title deeds must be registered. The registry allows lenders to search records to prevent frauds involving multiple lending on same property.
What it means for you
Banks and financial institutions must register mortgage by deposit of title deeds and securitization/reconstruction transactions with CERSAI. This reduces risk of fraud from multiple loans against same property. Lenders can now verify security interest before sanctioning loans, improving due diligence.
What you must do
- Register all mortgage by deposit of title deeds and securitization/reconstruction transactions with CERSAI as per rules.
- Ensure compliance with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011.
- Use CERSAI records to search for existing security interests before sanctioning loans against property.
- Update internal processes to include CERSAI registration as a mandatory step in loan origination.
Who it affects
All registered Securitisation Companies and Reconstruction Companies, Banks and financial institutions granting loans against property, Lenders dealing with mortgage by deposit of title deeds
What is the purpose of CERSAI?
CERSAI is a central registry to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property. It records security interests and allows lenders to search before sanctioning loans.
Which transactions must be registered initially?
Initially, transactions relating to securitization and reconstruction of financial assets, and mortgage by deposit of title deeds to secure loans from banks and financial institutions must be registered.
Who can search the CERSAI records?
Any lender or any other person desirous of dealing with the property can search the records maintained by the Central Registry.