CERSAI: Objectives & Registration

cersai image — (source:shardaassociates)

The concept of loan against mortgage has been a popular one. However, issues about security and property-related frauds have been of rising concern. The Government tried to curb such fraudulent activities with the establishment of CERSAI. Accessing the CERSAI registration platform enables individuals or organisations to find detailed information on a property after paying CERSAI charges.

Are you planning to buy a home or seeking information on a property? This article will give you details on all you need to know about CERSAI and its benefits.

What Is CERSAI?

The Indian Government established the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under Section 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It received a licence from Section 25 of the Companies Act, 1956.

The Government set up CERSAI registration in 2011 to track online data regarding lending transactions against equitable mortgage properties. Thus, if you wonder, "what is CERSAI?”, it can be described as a way of checking online data on a property after paying the required CERSAI charges.

Before CERSAI came into existence following the CERSAI Act in Section 20, only the lender and borrower of property were subject to having details on a property's encumbrance. The disjointed registration system was mainly responsible for this. As a result, fraudulent individuals could take multiple loans on the same property from banks.

Moreover, they often sold these properties to unsuspecting buyers with loans attached to them, resulting in a lack of information regarding the existing liabilities of the property.

Thus, one can easily decipher the importance of CERSAI registration. It connects to the security of mortgage loans and property transactions across India. Therefore, the need for this government initiative is evident; it enables individuals to purchase properties after being fully aware of their existence and backgrounds.

A long-term goal of CERSAI is to ensure that properties with dubious backgrounds are going under checks before sanctioning mortgage loans.

What Are the Main Objectives of CERSAI?

CERSAI registration aims to enhance the security of mortgage loans and thereby pave a better future for citizens purchasing such properties. In this regard, some of the objectives of CERSAI are as follows.

Identify fraudulent and dubious activities in lending money with property mortgage
Allow banks and other financial institutions to register transactions in terms of asset security and reconstruction
Register any security interests created through accounts receivables or assignment of factoring
Cover the registry of security interests on properties outside tangible assets, and consider all forms of mortgages prevalent in India

What Is CERSAI Search?

While understanding the details of CERSAI registration, major significance is attached to the concept of CERSAI Search. Whenever a bank or financial institution approves a loan against property, details of this property are entered in the CERSAI database. The employees of banks need to do this by mandate. Thus, CERSAI has a large and diverse database.

Any time an individual tries to generate a loan multiple times against the same property, a financial institute can find out the property's details and thereby identify fraudulent activities. They can check if anyone used the property previously to generate a mortgage loan from any other place.

How Does the CERSAI Database Help Homebuyers?

While the CERSAI database is mostly used for identifying fraudulent activities in the banking and loan sector, it can also be helpful for potential homebuyers. The Real Estate Act, 2016 made it mandatory for properties to meet a certain standard in size and value to fall under its realm. As a result, homebuyers would find it difficult to check the background and authenticity of properties before purchasing them.

However, this was the case before the Government established CERSAI registration. The CERSAI portal enables users and homebuyers to access valuable data regarding all available properties. It allows investors and homebuyers to check if a concerned property is under mortgage with any financial institution. They can also easily find out in case of any encumbrances attached to them, thereby taking proper measures.

How Is the CERSAI Database Updated?

Developing a CERSAI database is a complicated process, and regular updates are mandatory for its maintenance. Whenever banks or financial institutions provide loans against property, they update necessary information regarding the property on the CERSAI database. The process is termed “Registration of charges”. It enables them to issue encumbrance certificates to concerned properties, against which loans are issued. Investors and homebuyers understand the risks and uncertainties of such properties with its help.

On the other hand, when a property is freed from the mortgage and other financial and legal liabilities, it will be listed with a non-encumbrance certificate. Thus, if you find a property with a non-encumbrance certificate, it means that the seller is genuine and the property is not under any dispute. It is thus clear according to CERSAI verification. The CERSAI database needs to be updated based on banks' information within 30 days of the transaction.

CERSAI Registration Process

Now that you know the importance of CERSAI registration, let’s proceed with the details of the CERSAI registration procedure. For this, you need to follow the steps mentioned below.

Step 1- Visit the official portal of CERSAI and click on the "Entry Registration" option on the Home Page. You will need to have a digital signature to move forward.

Step 2- Fill the form with your necessary details, such as employee ID, name, mobile, email and others. Make sure to use authentic information.

Step 3- You can then print this filled form. Ask an authorised signatory to sign it.

Step 4- Send the offline form along with the necessary documents and registration charge manually to the CERSAI address by post.

What Is CERSAI Registration Fee?

In this regard, you might wonder, "what are CERSAI charges?” Government imposes specific CERSAI fees, calling it a "fee for registering security interest". It usually varies between ₹ 50 and ₹ 100, depending on the amount sanctioned for a mortgage loan against a concerned property. If a borrower takes a loan below ₹ 5,00,000, they pay CERSAI charges of ₹ 50 + service tax, and if it exceeds this amount, they need to spend at least ₹ 100 + service tax.

Therefore, you can see that CERSAI Registration plays a vital role in eradicating frauds related to property loans. This has made investing in real estate properties more secure for individuals. They can now find all details of a property enlisted in the official portal of CERSAI before investing in them.

Frequently Asked Questions

✓ How can I check my CERSAI details?

You will have to open the official website of CERSAI and click on "Public search". Click on "Asset-based search" from the drop-down list, enter the asset details, and make the payment. You can then check the details of a property.

✓ Is CERSAI registration mandatory?

All Scheduled Commercial Banks (including RRBs), Local Area Banks, Small Finance Banks, Co-operative Banks, and NBFCs must register with CERSAI.