The Central Registry (CERSAI): Establishment and Purpose

A security interest is only as good as the ability to know it exists. Before the Central Registry, a borrower could pledge the same property to several lenders who had no way to discover each other's charges. Chapter IV of the Act created a single national registry, CERSAI, to record security interests and make them searchable. This note sets out what the Central Registry is, the register it keeps, and why it was created.

1. What the Central Registry Is

Figure 1: A single national registry of security interests

• Set up under s.20. The Central Government set up the Central Registry under s.20 to keep a record of transactions of securitisation, reconstruction and security interests.
• CERSAI. In practice the body is the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, known as CERSAI.
• A single national registry. It is one central registry with countrywide reach, not a scatter of local offices, so a charge is searchable nationally from one place.
• Run under the Act and rules. Its working is governed by the Act and the SARFAESI (Central Registry) Rules 2011, which set the forms, the fees and the procedure.

2. The Central Register

Figure 2: What the register holds, and how

• The Central Register, s.21. The registry keeps a Central Register in which the particulars of the notified transactions are entered.
• Kept electronically, s.22. The Central Register is maintained in electronic form, so transactions can be filed and searched online rather than on paper.
• What it records. Transactions of securitisation and asset reconstruction, and the creation, modification and satisfaction of security interests (Topic 42)
• Open to search. The register is open to inspection by any person on payment of the fee, giving the public a way to check an asset before dealing (Topic 42)

3. Why the Registry Was Created

Figure 3: Transparency against hidden charges

• Stop multiple financing fraud. A central record prevents a borrower pledging the same asset to several lenders who do not know of each other, a common fraud before the registry.
• Public notice of charges. A registered security interest is notice to the world, so a buyer or a later lender can check before dealing with the asset.
• Foundation for priority. Registration is the base on which the 2016 priority of secured creditors is built: those who register gain priority (Topics 49, 50)
• Cleaner credit, fewer disputes. By making charges visible, the registry reduces disputes over competing claims and supports sounder lending decisions.

4. Frequently Asked Questions

What is CERSAI and under which provision was it established?

CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, is the central registry established by the Central Government under Section 20 of the SARFAESI Act. It is a single national registry that keeps a Central Register, under Section 21 and maintained in electronic form under Section 22, recording transactions of securitisation and asset reconstruction and the creation, modification and satisfaction of security interests. Its working is governed by the Act and the SARFAESI (Central Registry) Rules 2011. The register is open to inspection by any person on payment of the prescribed fee, so a charge registered with CERSAI is searchable across the country from a single source.

Why was the Central Registry created?

The Central Registry was created to bring transparency to security interests. Before it, a borrower could create charges over the same property in favour of several lenders who had no reliable way to discover each other's interests, enabling the fraud of multiple financing on a single asset. By recording security interests in one central, electronically searchable register, CERSAI gives public notice of charges, so a prospective buyer or lender can check an asset before dealing with it. The registry also lays the foundation for the priority of secured creditors introduced by the 2016 amendment, under which a secured creditor who registers its interest gains priority over others.

5. Related Topics

• Topic 42: Registration of Security Interests with CERSAI. How transactions are filed and searched.
• Topic 49: Priority of Secured Creditors (Section 26E). The priority registration now gives.