CENTRAL REGISTRY OF SECURITISATION ASSET RECONSTRUCTION AND SECURITY INTEREST OF INDIA (CERSAI)

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CENTRAL REGISTRY OF SECURITISATION ASSET
RECONSTRUCTION AND SECURITY INTEREST OF INDIA
(CERSAI)
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Background

• In respect of creation of mortgages through
  institutional finance, a number of frauds were
  taking place in which multiple documents of title
  relating to the same property were deposited with
  different lenders
• The Securitisation and Reconstruction of
  Financial Assets and Enforcement of Security
  Interest (SARFAESI) Act contains provisions for
  setting up a Central Registry for the purposes
  of registration of transaction of securitisation
  and reconstruction of financial assets and
  creation of security interest.

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SARFAESI Act

• Section 20. Central Registry
• (1) The Central Government may, by notification,
  set-up or cause to be set-up from such date as it
  may specify in such notification, a registry to
  be known as the Central Registry.
• (2) The head office of the Central Registry shall
  be at such place as the Central Government may
  specify and for the purpose of facilitating
  registration of transactions referred to in
  sub-section (1), there may be established at such
  other places as the Central Government may think
  fit, branch offices of the Central Registry.

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SARFAESI Act

• Sections 21, 22 summarised
• Central Registrar and Central Register
• GOI may by notification set up or cause to be
  setup the Central Registry
• GOI may by notification appoint Central Registrar
• Central Register shall be kept at the head office
  of the Central Registry under the control and
  management of Central Registrar.

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SARFAESI Act

• Sections 23, 24, 25 summarised
• Filing of transactions of securitisation,
  reconstruction and creation of security interest
• Modification of security interest registered
  under the act
• Reporting of satisfaction by Securitisation
  company, reconstruction company or secured
  creditor
• Section 26
• Right to inspect particulars of securitisation

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SARFAESI Act

• Section 31
• Not applicability of the act to .. (h) financial
  asset not exceeding Rs. 1 lakh, (i) security
  interest created in agricultural land, and (j)
  when amount due is less than 20 of principal
  plus interest
• Section 38
• Power of Central Government to make rules
• Section 39
• Provisions of section 21(2-4), 22 27 to apply
  after Central Registry is set up

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Setting up of the Central Registry

• In the Budget speech for 2011-12, the Union
  Finance Minister had announced that the Central
  Registry would be operationalised by March 31,
  2011.
• CERSAI was incorporated and soft launched on
  March 31, 2011 for the purpose of operating and
  maintaining the Central Registry under the
  provisions of the Securitisation and
  Reconstruction of Financial Assets and
  Enforcement of Security Interest Act, 2002
  (SARFAESI Act).
• The records maintained by the Central Registry
  will be available for search by any lender or any
  other person desirous of dealing with the
  property.
• The company has been setup with an authorised
  capital of Rs 100 crore and authorised paid up
  capital of Rs 49 crore with Governments
  contribution of 51 and rest 49 by 11
  shareholding banks.

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Shareholding Banks

• National Housing Bank
• State Bank of India
• Punjab National Bank
• Bank of Baroda
• Bank of India
• Canara Bank
• IDBI Bank Ltd
• Union Bank of India
• Central Bank of India
• Syndicate Bank
• Indian Overseas Bank

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Equity Contribution

• Government of India (25 crore)
• National Housing Bank (25 lac)
• State Bank of India (25 lac)
• Punjab National Bank (25 lac)
• Bank of Baroda (25 lac)
• Bank of India (25 lac)
• Canara Bank (25 lac)
• IDBI Bank Ltd (25 lac)
• Union Bank of India (25 lac)
• Central Bank of India (25 lac)
• Syndicate Bank (25 lac)
• Indian Overseas Bank (25 lac)

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Users Registration

• Before the registration of transactions can be
  done on the Central Registry by an institution,
  the institution has to apply for registration of
  User Administrator(s) with CERSAI.
• The User Administrator creates and authorizes
  users of the institution to access the Central
  Registry for various purposes.

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Process of Registration

• The process of registration of transactions of
  securitisation, asset reconstruction and creation
  of security interest is carried out through the
  portal of the Central Registry which can be
  accessed on the Internet.
• The URL of this web-portal is www.cersai.org.in.

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Process of Registration Contd

• The transactions related to registration of
  mortgage by deposit of title deeds in favour of
  banks and financial institutions are entered in
  the system.
• As per Central Registry Rules 2011, each
  institution has to register a security
  transaction with central registry system within
  thirty days of the creation of charge /
  securitization.
• There is a fee for each registration which has to
  be paid at the time of registration.
• The registration process has since been extended
  to the assignment of debt (factoring
  transactions).

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Fee Structure
Serial Number Nature of transaction to be Registered FORM No. Amount of fee payable
(1) (2) (3) (4)
1. Particulars of creation or modification of Security Interest in favour of secured creditors FORM I 500 for creation and for any subsequent modification of Security interest in favour of a secured creditor for a loan above 5 lakh. For a loan upto 5 lakh, the fee would be 250 for both creation and modification of security interest.
2. Satisfaction of any existing Security Interest FORM II 250
No fee is charged on subsisting registrations
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Forms

• Form I - Creation and modification of charge
• Form II - Satisfaction of Charge
• Form III - Securitisation or Reconstruction of
  Financial Assets
• Form IV - Satisfaction of Securitisation or
  Reconstruction of Financial Assets

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Checklist for registration of security transaction

• Registration of the entity / institution
• Registration of two Primary User Administrators
  (PUAs) with CERSAI.
• Registration of Maker and Checker users for
  respective institutions
• Availability of Digital Certificate for PUAs and
  Checkers
• Registration of Digital Certificate with CERSAI
  portal

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IT Architecture

• Ernst Young was engaged initially as a
  management consultant for preparation of RFP
  document, finalisation of SLA and UAT testing.
• The task of setting up the portal was entrusted
  to TCS.
• The IT infrastructure for Central Registry has
  since been commissioned with Data Centre (DC) at
  Noida and Disaster Recovery Site (DRS) at
  Chennai.
• These centers are manned on 24X7 basis by the IT
  vendor of the company.
• The help-desk support is being extended from the
  Project Office at Bhikaji Cama Place, New Delhi.
• The support center is manned by six persons from
  the IT vendor.

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Institutions

• All Commercial Banks
• Private Banks
• Foreign Banks
• Co-Operative Banks
• RRBs
• Selected HFCs (22)
• FIs
• Asset Reconstruction Companies

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Factoring transactions

• Factoring Regulation Act - every factor shall
  file, for the purposes of registration, the
  particulars of every transaction of assignment of
  receivables in its favour with the Central
  Registry.
• Form-I for registration of factoring transactions
  and Form-II for satisfaction of factoring
  transactions along with fee for registration are
  prescribed by the Government.
• Factoring transactions are also being registered
  at CERSAI portal.

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MIS
Number of institutions registered 292
Number of users registered 108089
Number of fee based transactions 1861189
Number of subsisting registrations (non-fee based) 5552909
Total Transactions Registered 7414098
Average number of transactions (last 10 days) 94441
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Registration of Institutions
Institutions Number
Public Sector Bank 26
Private Bank 20
Foreign Bank 26
Co-operative Bank 66
Regional Rural Bank 72
Housing Finance Company/FIs 76
Local Area Bank 1
Grand Total 287
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Users Registered
Institution Name Users
Public Sector Bank 94,270
Private Bank 7,941
Foreign Bank 326
Co-operative Bank 1,657
Regional Rural Bank 1,018
Housing Finance Company / Fis 1,570
Local Area Bank 6
Total 1,06,788
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Security Transactions Registered
Period Subsisting Regular
Till March 2012 2188475 1066707
April 2012 744868 49355
May 2012 94503 29459
June 2012 960413 131284
July 2012 331885 171220
August 2012 227691 100054
September 2012 841570 197065
October 2012 166649 118493
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Top 10 institutions
INSTITUTION_NAME COUNT
STATE BANK OF INDIA 1668756
HDFC LIMITED 1075240
PUNJAB NATIONAL BANK 313652
ICICI BANK LIMITED 257588
CANARA BANK 232340
UNION BANK OF INDIA 227462
BANK OF BARODA 221870
IDBI BANK LIMITED 196619
BANK OF INDIA 175246
SYNDICATE BANK 164553
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Factoring Transactions

• Institutions Registered

Factoring Companies (Public) 3
Factoring Companies (Private) 2
Total 5
Number of users registered 62
Total number of factoring transactions 588
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Training

• Training programmes for Public Sector Banks,
  Housing Finance Companies, Private Foreign
  Banks, Co-operative Banks, Regional Rural Banks
  and other Financial Institutions were organised
  at New Delhi, Mumbai, Bengaluru and Kolkata
  during Jan-Feb 2012.
• The training programmes were aimed to enhance
  awareness and capability among the member users
  of the registration system, and also enrich the
  participants through exchange of views/ideas
  between CERSAI and the member institutions.
• Training programmes were conducted in eight
  different batches with two days each per batch.
  The total number of participants who attended the
  training programme was 509.

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Public Search

• The records maintained by the Central Registry
  are required to be available for search by any
  citizen on deposit of requisite fee as prescribed
  under the Rules.
• Online search will be on the uploaded Security
  Interest records present in the Central
  Registrys database. This facility will be
  helpful to general public to check the
  encumbrance status on a given property and common
  knowledge of the encumbrance status by all
  lending institutions will help in preventing
  frauds.
• This facility is expected to start from 3rd week
  of January 2013.

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Connectivity with State Registries

• Property ownership, its history, and information
  on buy/sell transactions is not available easily
  to the average citizen.
• Central Registry addresses the encumbrance status
  of a property, there is no mechanism available in
  the Central Registry system to check the
  ownership of a property.
• Although CR is aimed at curtailing frauds wherein
  multiple loans are availed by deposit of same
  title deed with multiple lenders,
  non-availability of information like ownership
  etc. at the time of creation of security interest
  does not guarantee whether the borrower is the
  actual owner of the property.
• With land being a state subject governed by
  respective state laws, it is required to have a
  synergy between the CR system and the state
  registries. This will be beneficial for both the
  Central Registry and State governments as well.

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Contd

• This common synergy will benefit lenders by way
  of providing information on the existence of the
  property and genuineness of the title. At the
  same time, state governments can check the
  encumbrance status before accepting the
  transaction and title claim.
• This common registry will benefit all stake
  holders viz, citizens, lending institutions,
  central and state governments. For states this
  will provide a more transparent market resulting
  in greater funds flow.
• For the lenders, total title information will
  become available besides encumbrance. In the
  absence of information on the genuine title, only
  encumbrance certificate will not be sufficient to
  prevent fraud.

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Bank Guarantee

• Bank Guarantees are governed under the Indian
  Contract Act, 1872
• RBI had issued several guidelines for avoiding
  frauds in bank guarantees, however, there are
  several instances of fake BGs
• Availability of information on BGs on a Central
  Portal for online search may be explored
• Credentials can be verified online

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IFC

• CERSAI passing through a rapid expansion stage
  and required to move fast to fulfill the
  responsibility placed and to provide knowledge
  feedback to government and other stake holders.
• IFC has shown interest in extending co-operation
• IFCs collateral Registries / Secured Lending
  Program provides advisory services to help
  strengthen the development of the private sector
  in South Asia.

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Contd .

• IFC has agreed to provide co-operation on the
  following.
• (i) Study of Registries in other countries and
  their operations
• (ii) Strategy and Business Planning
• (iii) Study / Research for Legislative and
  Regulatory Support
• (iv) Supporting streamlining of internal
  processes and procedure
• (v) Operational Support
• (vi) Planning for Monitoring of Compliances and
  Expansion.

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Thank You