What changed
RBI has notified UCBs that CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India) is operational since March 31, 2011, under the SARFAESI Act. UCBs are now encouraged to voluntarily file records of equitable mortgages with CERSAI to access its database and prevent property-related loan frauds.
What it means for you
For UCBs, this is a critical tool to detect and deter frauds where borrowers pledge the same immovable property to multiple lenders. By registering mortgages with CERSAI, banks can search existing security interests before sanctioning loans, reducing credit risk. Non-registration may leave UCBs vulnerable to fraudulent multiple lending on the same asset.
What you must do
- Voluntarily file all equitable mortgage records with CERSAI as per the SARFAESI (Central Registry) Rules, 2011.
- Integrate CERSAI search into your loan sanction process to verify existing security interests on property.
- Train loan officers on CERSAI registration and search procedures to ensure compliance and fraud prevention.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Lending officers handling secured loans against immovable property, Risk and compliance teams at UCBs
What is CERSAI and why was it set up?
CERSAI is a central electronic registry under the SARFAESI Act, operational since March 31, 2011, to prevent frauds involving multiple lending on the same immovable property by allowing lenders to search and register security interests.
Is registration of equitable mortgages with CERSAI mandatory for UCBs?
As per this circular, registration is voluntary but strongly recommended in the banks' own interest to access CERSAI's database and prevent fraud.
What types of transactions should be registered initially?
Transactions related to securitization and reconstruction of financial assets, and mortgages by deposit of title deeds to secure loans granted by banks and financial institutions.