CERSAI and its Impact on Home Loan
Mar 14, 2024Homes and People

CERSAI and its Impact on Home Loan

by Godrej Properties Limited

650

2

What is CERSAI?

CERSAI stands for Central Registry of Securitisation Asset Reconstruction and Security Interest of India. It is a government initiative in India that ensures security and transparency in home loan transactions. CERSAI facilitates the registration of security interests created by borrowers in favour of lenders while availing home loans. This includes mortgages or any other security the borrower provides against the loan.

The introduction of CERSAI has significantly impacted home loan processes and even home loan interest rates. Here are some of the critical impacts: 

Security and Transparency: CERSAI facilitates the registration of security interests created by borrowers in favour of lenders when availing of home loans. This ensures transparency in property transactions and provides a centralised platform for verifying the encumbrance status of the property.

Prevention of Double Financing: Maintaining a centralised registry, CERSAI helps prevent double financing of the same property. Lenders can check the registry to ensure that the property offered as collateral for a home loan is not simultaneously pledged for another loan.

Efficient Due Diligence: Lenders can conduct due diligence by accessing CERSAI's records before approving a home loan. This reduces the risk of fraud and provides a standardised system for recording security-related transactions.

Asset Reconstruction in Case of Default: In case of default, CERSAI plays a role in maintaining records related to the transfer and reconstruction of distressed home loan assets. This ensures a systematic and transparent process in dealing with defaulted loans.

Streamlining Legal Processes: CERSAI contributes to streamlining legal processes related to property transactions, especially where home loans are involved. The registry helps standardise documentation and record security interests, making it easier for lenders to enforce their rights in case of default.

Enhanced Credibility for Borrowers: Borrowers benefit from CERSAI as well. The registry adds credibility to the lending process by ensuring that the property offered as collateral is adequately recorded and can be easily verified by potential lenders.

 What is the ownership structure of CERSAI?

Registered under Section 25 (now Section 8) of the Companies Act, 1956, CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, is a government-owned entity established under the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act), 2002.

What is the fee structure

Details related to establishing or altering security interests favouring secured/other creditors.INR 100 for a loan above INR 5 lakh and INR 50 for a loan up to 5 lakh.
Specific details regarding the securitisation or reconstruction of financial assets. INR 500
The fulfilment or completion of the process related to the securitisation or reconstruction of financial assets.INR 50
Assignment of ReceivablesThe fee for the assignment of receivables is INR 10 for amounts less than INR 5 lakh and INR 100 for amounts equal to or exceeding INR 5 lakh.
Fulfilment of registration on the realisation of the receivablesNIL
AOR Registration between 0-10 daysApplicable standard charges
AOR Registration beyond ten days and up to 20 daysApplicable standard charges + Ten times the standard rate applies
AOR Registration beyond 20 days

Applicable standard charges + mandatory government approval for delays


 

Frequently, individuals drawn to the allure of the cheapest home loan rates may find themselves deceived by misleading offers, emphasising the importance of thorough research and cautious decision-making in real estate financing. CERSAI significantly impacts home loans by streamlining processes, ensuring transparency, and mitigating risks. Its centralised registry enhances the efficiency of transactions, benefiting both lenders and borrowers in the housing finance landscape.

 

Frequently Asked Questions

Q. Under which law CERSAI was established?

A: CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, was established under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.  

Q. How can I know CERSAI details?

A: You may visit the official portal CERSAI at https://www.cersai.org.in/CERSAI/home.prg for any information about CERSAI.