How does the CERSAI database help Homebuyers and banks?

The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) was established, under Section 20 of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002). It is a government-owned company that operates a central registry that deals with the filing of the security interest of immovable, movable, and intangible properties and assignment of receivables, among others, by financial institutions.

The CERSAI Portal can be used by both financial institutions and the public. However, the general public can only access the details related to equitable mortgages. The details of registration of charges are available to the public through which the home buyer can find out whether the property is mortgaged with some financial institution or if there are any encumbrances attached to it. Earlier to the introduction of the CERSAI act, the Real Estate (Regulation and Development) Act,(RERA Act) under which the avenues of property and real estate developer verification were limited. There were several incidents of homebuyers being duped on the pretext of false promises and fraudulent practices by the developers. However, after the introduction of the CERSAI portal, the prospective homebuyer can check if the property they have shortlisted is free of any liability or has not been used as collateral for a loan. It not only saves homebuyers money but also saves them from tiring legal hassles in the future.

According to the government’s directives, financial institutions must register within 30 days details of security interests created by them with CERSAI. Banks have to mandatorily report the details of the transactions to the CERSAI database which is known as ‘registration of charges’.  In case the lenders fail to provide the details of mortgaged properties to CERSAI within this time frame, they will be penalised in the form of monetary penalties. Further, a creditor will not be able to enforce its SARAFESI rights if the security interest is not registered with CERSAI. (Note: non-registration with CERSAI will not hinder the rights of the creditor in liquidation or winding-up proceedings under the Companies Act or the Code if the creditor has created the charge o9n the asset and creation of charge was filed with ROC). Besides,   a party  (not being a financial institution or bank) is required to file details of security interest with CERSAI having attachment order with respect to a property from a civil court or any other authority (This is a new clause introduced in the amendment which is effective only after 24.01.2020 amendment). Further, the Tax authority is also required to file details of security interest with CERSAI on the issuance of an attachment order for recovery of tax dues (This is a new clause introduced in the amendment which is effective only after the 24.01.2020 amendment).     Any other authority or officer of the Central Government or any State Government or local authority on the issuance of an order for attachment of any property for recovery of any government dues is required to file details of security interest with CERSAI. (This is a new clause introduced in the amendment which is effective only after the 24.01.2020 amendment).

The fees charged to financial institutions for registration of charges vary between Rs.50 and Rs.100 depending upon the amount of loan that has been granted against the security of the property. The CERSAI charge on a home loan is referred to as a ‘memorandum of deposit of the deed fee’.  When a bank process the loan request from a prospective borrower bank will first pull out the records from the CERSAI, to check the registry to ensure that the property against which they are extending a loan is not encumbered by a pre-existing security interest created by another lender. Of course, fees paid by the bank will be recovered from the proposed borrower irrespective of his home loan request is approved or rejected.

Any public can have access to the CERSAI database regarding mortgaged properties in India at https://cersai.org.in/CERSAI/home.prg. After clicking on the ‘Asset Based Search’ tab under ‘Public Search’, you will then have to enter the asset’s details and make the payment, before the report information is generated. For each search, the user will have to pay Rs 10 plus GST, as search charges.

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