Security Interest Registration & CERSAI

The Central Registry of Securitization, Asset Reconstruction and Security Interest of India (CERSAI) is a Central Registration System set up under Chapter IV of the SARFAESI Act. It was incorporated with the intention of capturing details of equitable mortgages created by borrowers in favor of lenders  (banks and other financial institutions) that come under the purview of SARFAESI Act, 2002. Later on, with the amendment of SARFAESI (Central Registry) Rules in the year 2016, many other security interests were also notified as eligible to be registered with CERSAI. Services extended by CERSAI act as important risk mitigation controls for lender, at present.   

Security interests that are to be registered with CERSAI

Creation/modification/satisfaction of the security interests coming under the following categories of securities are required to be registered with CERSAI. 

•    Equitable Mortgage– Security interest in immovable property created by deposit of title deeds.
•    All other mortgages like Registered Mortgage, Simple Mortgage, English Mortgage, Mortgage by conditional sale, usufructuary mortgage, anomalous mortgage etc used for creation of security interest in immovable property. 
•    Hypothecation of plant and machinery, stock, debt including book debts and receivables.
•    Security interest (charge) In intangible assets like patent, copy right, trade mark, license, know how, franchise and any other business or commercial right of similar nature.
•    Security interest on under-construction residential or commercial building or a part thereof, created by way of an agreement or instrument other than by mortgage. 

Is security interest by way of mortgage of all properties need to be registered with CERSAI? 

Agricultural property is not covered by the provisions of SARFAESI Act.  Hence registration of charge on an agricultural property created by way of mortgage is not envisaged to be registered with CERSAI. 

Security interest created by way of mortgage in following types properties should invariably be registered with CERSAI.  The charge should be created irrespective of the nature of charge (primary / collateral). Hence registration must be carried out on all securities accepted as primary security  and collateral security. 

•    House plots, Villas/Flats/Houses  
•    Industrial plots 
•    Commercial plots , Commercial units

Creation, modification and satisfaction of charges shall also be mandatorily carried out in all kinds of loans including consortium loans, taken over loans, staff loans and assets sold to asset reconstruction companies.  

Who (borrower or lender) should register security interest with CERSAI? Is there any penalty for delays?

The lender is envisaged to register the security interest (charge) with CERSAI. As per the laid down norms, the registration of security interest shall be completed within 30 days of the creation of the mortgage/charge.  This time period is applicable to creation, modification and satisfaction of charges. 

Beyond 30 days and up to 60 days, CERSAI permits registration of charge with penalty,  that varies depending on the days of delay and amount of loan. Beyond 60 days, charge creation in CERSAI site will be permitted only if the delay is condoned by the Central Government and the penalty imposed by them is paid. Digital Public Credit Registry (PCR) in India – An overview