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Arindam Pal & Adwitiyaa Das

 After almost nine years since the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”)[2], the Ministry of Finance, Government of India, has finally notified the modalities concerning the establishment of a Central Registry for the purposes of registration of transactions pertaining to securitisation and reconstruction of financial assets and creation of security interest vide notification F. No. 56/05/2007-BO-II dated March 31, 2011. Also in this regard, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011 (the “Central Registry Rules”) has been notified vide Notification No. G.S.R. 276(E), dated March 31, 2011. The same shall come into force on the date of their publication in the Official Gazette.

The requirement for the Central Registry Rules and the establishment of the Central Electronic Registry has been made pursuant to the recommendations made by a working group set up by the Indian Banks Association in January 2009 under the Chairmanship of Mr. S. Sridhar, former Chairman-cum-Managing Director, National Housing Board.

The Central Registry Rules mandates the establishment of a Central Registry and compulsory registration of all particulars pertaining to every transaction of securitisation or reconstruction of financial assets and satisfaction of such transaction on realisation of the financial assets or creation, modification or satisfaction of any security interest within a period of thirty (30) days under Sections 23, 24 and 25 of the SARFAESI Act, in such forms as may be specified by the Central Government from time to time[3]. Such registration of particulars with the Central Registry is however deemed to be in addition and not in derogation of any of the specific provisions contained in Registration Act, 1908, Companies Act, 1956, Merchant Shipping Act, 1958, Patents Act, 1970, Motor Vehicles Act, 1988, Designs Act, 2000 or any other law requiring registration of charges and shall not affect the priority of charges or validity thereof under those Acts or laws.

The availability of electronic records maintained by the Central Registry is expected to prevent, minimize and mitigate unfortunate instances of fraud wherein banks and financial institutions tend to extend/ sanction financial assistance against provisioning of security of same property as well as fraudulent sale of the same without disclosing the security interest over such property by unscrupulous borrowers since the same can be searched by any lender or other person desirous of dealing with the same properties.

The Central Registry Rules prescribes various forms for registration and the requisite fees required to be paid for filing registration and conducting search in the Central Registry. Every request for inspection of any record maintained by the Central Registry shall be accompanied by a fee as specified below:

Sl. No. Nature of transaction to be Registered Form No. Amount of Fees Payable
1. Particulars of creation or modification of Security Interest in favour of secured creditors Form I Rs. 500 for creation and for any subsequent modification of Security interest in favour of a secured creditor for a loan above Rs. 5 lakh. For a loan upto Rs. 5 lakh the fee would be Rs. 250 for both creation and modification of security interest
2. Satisfaction of any existing Security Interest Form II Rs. 250
3. Particulars of securitisation or reconstruction of financial assets Form III Rs. 1,000
4. Particulars of f satisfaction of securitisation or reconstruction transactions Form IV Rs. 50
5. Any application for information recorded/maintained in the Register by any person Rs. 50
6. Any application for condonation of delay up to 30 days Not exceeding Rs. 2,500 in case of creation of security interest for a loan up to Rs. 5 lakh and not exceeding Rs. 5,000 in all other cases

To give the much needed teeth to the aforesaid provisions and implement the same, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), a government company incorporated under section 25 of the Companies Act, 1956, has been incorporated for the purpose of operating and maintaining the Central Registry under the provisions of the SARFAESI Act.  Also, the Central Registry has become operational on March 31, 2011.

Currently, it has been decided that Shri R.V.Verma, Chairman and Managing Director, National Housing Bank shall hold additional charge as the Registrar of the Central Registry for a period of three months and he shall also be the Managing Director and Chief Executive Officer of CERSAI incorporated for the purpose of operating the Registration System.

[1] By Arindam Pal, Partner, PXV Law Partners and Adwitiyaa Das, Senior Associate, PXV Law Partners

[2] The specific provisions in relation to the establishment of Central Registry have been provided in Sections 20 -26 of the SARFAESI Act.

[3] Rule 5(2) of the Central Registry Rules specify that in cases where there is a delay in filing the particulars of transaction for registration or modification or satisfaction within the time specified in sub-rule (1), the Central Registrar, on an application in specified form, stating the reasons for delay not exceeding thirty days from next following the period of thirty days provided in sub-rule (1) may allow filing of the particulars of transaction on payment of additional fees as specified in these rules


1 Comment

  1. Viney says:

    A good step taken by Govt has also paved a way in securitization of mortgaged properties soon we will also deal in securities on mortgaged properties. With central registry the creation of mortgage has become transparent & will certainly diminish the frauds being played by scrupulous persons. From description as above the central registry seems perfect but only the operation of the central registry will show whether it needs some modifications in structure or procedure etc & that can be modified later on keeping in view the need of doing so.

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