What is CERSAI?
CERSAI refers to Central Registry of Securitisation Asset Reconstruction and Security Interest of India. It was created to stop the prevalence of fraudulent activity in the case of Home Loans and Loans Against Property.
Until a few years ago, when there was no CERSAI, all legal paperwork regarding a loan remained between the borrower and the lender. Thus, there was no way for a lender to figure out if the borrower had already taken a loan against the property they were pledging as a collateral. Many buyers used this loophole in the system to take many loans against a single property.
CERSAI was introduced in the country under Section 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It has made the registration system completely safe – the CERSAI registry is mandatory, and the company maintains a record of all the properties that have been pledged as a collateral as well as details of which bank has sanctioned loans against these properties.
CERSAI came into existence in 2013. It is currently owned by the Government of India but some major banks in the country also have a share in it. Now that we know the basic details about CERSAI, let us look at its key functions and CERSAI charges on Home Loans.
Key Functions of CERSAI
- The primary function of CERSAI is to maintain a centralised record of fair and equitable mortgages with the intention of minimising the rampant fraudulent activities within the Home Loan sector.
- During the CERSAI registry, the borrower is required to fill out a CERSAI registration form that contains details of the mortgage as well as the bank and lender that has approved a real estate loan against the property.
- CERSAI has helped build a centralised system that helps banks and other financial institutions get access to any transaction pertaining to the reconstruction and securitization of assets. Thus, when a borrower applies for a loan, the lender can take the help of this central system to ensure that the property against which the lender is disbursing the loan is free of lien and the borrower has not taken any other loan against it.
- The CERSAI system not only helps lenders but also helps homebuyers. Buyers can use the system to make sure that the property they are investing in is free of all types of liabilities. Let us look at this in detail in our next section.
How Does the CERSAI Database Help Homebuyers?
Before CERSAI came into existence, there was no sure-shot way for borrowers to figure out if the property they were planning to buy was free of any kind of liability. They simply had to depend on the reputation of the builder for there was no way to check if they were being duped. Similarly, in the case of homes and stand-alone buildings, buyers had no way to figure out if the owner had taken a loan against the property. The good thing is that this is not the case now. Today, homebuyers can check everything beforehand. This helps ensure they are not being duped.
What are CERSAI Charges on Home Loans?
If you are applying for a Home Loan, you must familiarise yourself with the concept of CERSAI charges.
When borrowers apply for a loan, lenders pull out all encumbrances on properties. They do so to make sure the property against which they are sanctioning a loan is free of all kinds of liabilities and encumbrances. To pull out these records, the lender must pay a small fee to the CERSAI registry. The lenders, in turn, transfer these charges they pay to get access to records from the CERSAI registry to the borrower. In your Home Loan statement, these charges will appear as CERSAI charges on Home Loans or Memorandum of the Deposit of Deed Fee. Borrowers must know that even if a bank denies a borrower’s loan application, they must pay the CERSAI charges on Home Loans.
What are the Fees for CERSAI Registration?
The CERSAI registry charges are quite minimal and vary depending on the value of the loan sanctioned.
How to Register DSC on CERSAI?
All property owners must register their properties or the assets they own on the portal. However, to be able to do so, you will need your DSC or digital signature certificate. The DSC is the electronic security certificate that establishes the identity of an individual. Follow these steps to obtain DSC on CERSAI:
1. To register DSC on CERSAI, first get your DSC from a licensed certifying authority, such as TCS or MTNL.
2. Next, login to your CERSAI portal using your username and password.
3. Once you are logged in, find the ‘DSC’ tab on the home page and then choose ‘register DSC’.
4. You will be required to attach certain documents, such as identity proof and address proof documents. In the case of firms, one is required to submit the Certificate of Incorporation. So, please keep all these documents handy with you.
5. Once you have uploaded all the documents, click on ‘Submit.’
DSC registration takes a few days. So, be patient.
Steps to Login to CERSAI
1. Logging into CERSAI is easy. Simply follow these steps:
2. Go to the official website of CERSAI and click on Login.
3. Enter your login ID, password, and captcha code.
4. Click on ‘Login’ and you will be taken to your CERSAI account.
Also Read: Importance of Encumbrance Certificate for Home Loan
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