Banking News

New CERSAI Rules makes mandatory registration of charges which were not required under the old Rules


The Government of India has amended the rules under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011(Referred as principal rules). The amendment to principal rules came into force from the date same were published in the gazette of India   Part II section3 sub-section. (i) (January 22, 2016) . The new rules are called as Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Amendment Rules, 2016.

The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) is a Government Company licensed under Section 25 of the Companies Act 1956. It has been incorporated for the purpose of operating and maintaining the Central Registry under the provisions of the SARFAESI Act, 2002. Initially transactions relating to securitization and reconstruction of financial assets and those relating to mortgage by deposit of title deeds to secure any loan or advance granted by banks and financial institutions, as defined under the SARFAESI Act, are to be registered in the Central Registry. 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. Availability of such records would prevent frauds involving multiple lending against the security of same property as well as the fraudulent sale of property without disclosing the security interest over such property. It may be noted that under the provisions of Section 23 of the SARFAESI Act, 2002 particulars of any charge creating the security interest over property is required to be filed with the registry within 30 days from the date of creation.

As per the old rules, only the secured creditors were required to file in respect of equitable mortgages created in their favour to register the same with CERSAI.  However, the new rules with the insertion of  sub-rule Rule 2A ,B, C, D  in rule 4 makes it mandatory for creditors to  register with CERSAI the other type of charges.

The sub-rule (2A) statuses that “the particulars of creation, modification or satisfaction of security interest in immovable property by mortgage other than mortgage by deposit of title deeds shall be filed in Form I or Form II, as the case may be, and shall be authenticated by a person specified in the Form for such purpose by use of a valid digital signature”. Section 2D conditions that the particulars of creation, modification or satisfaction of security interest in any under construction, residential or commercial building or a part thereof by an agreement or instrument other than by mortgage, shall be filed with CERSAI.

Whereas the sub-rule 2B marks it mandatory to file  creation, modification or satisfaction of security interest in hypothecation of plant and machinery, stocks, debt including book debt or receivables, whether existing or future.

In terms of sub-rule 2C, creation, modification or satisfaction of security interest in intangible assets, being know-how, patent, copyright, trade- mark, licence, franchise or any other business or commercial right of similar nature shall be filed.

Section 2D conditions that the particulars of creation, modification or satisfaction of security interest in any under construction, residential or commercial building or a part thereof by an agreement or instrument other than by mortgage, shall be filed with CERSAI.

 

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