Banking Article, Banking Finance 2021, Banking Finance July 2021

CERSAI 2.0: A WAY FORWARD

Government of India established the Central Registry of Securitisation Asset Reconstruction and Security Interest of India(CERSAI) to operate and maintain Central Registry functions as per SARFAESI Act 2002.CERSAI provides platform to All scheduled Commercial Banks(including RRBs) , Small Finance Banks, Local Area Banks, all Co-operative Banks, all NBFCs and All India Financial Institutions , for filing registrations including modification and satisfaction of transactions of securitizations, asset reconstruction and security interest.

An upgraded version of security interest portal that is CERSAI 2.0 had been  released on 3rd August, 2020 and had introduced some significant changes. The Entity Registration functionality is accessible on the CERSAI 2.0 portal. For accessing the various functionalities available on the portal and registering details of security interest , entities must be registered. As per chapter IV-A of SARFAESI Act entities are classified in to three main categories namely secured creditors, other creditors , Revenue Authorities. There is well defined procedures for their registration on the portal.

 

Access and functioning in CERSAI 2.0

  • Made simple and flexible.
  • Access to CERSAI 2.0 application requires a valid Digital Signature(DS)
  • Any existing User with valid DS of any class are able to access CERSAI 2.0
  • For activity on CERSAI portal , Existing users after expiry of their current DS including New Users registered in CERSAI 2.0 should have class III DS
  • For logging in CERSAI 2.0 first time , Users can use default password. The default password is combination of the last four digits of their CERSAI user id and their date of birth (DDMMYY)
  • No maker checker concept in CERSAI 2.0. Any authorized user will be able to perform end to end transaction.
  • Single user, Multiple roles- More than one roles may be assigned to one user
  • Flexibility in Assignment of Roles: It is possible to add/remove role to an existing user id.

 New Features in CERSAI 2.0

Short Messaging Service(SMS):

  • Notifications for the relevant transactions are sent through email as was previously . Apart from the email notifications, now SMS are also sent to the concerned users of the Entities and CERSAI on their registered mobile number . This has been made mandatory in CERSAI 2.0
  • Previously as notifications are sent through emails only but sometimes they were undelivered or delivered with delay due to non-availability of internet or were not seen by the users being away from the system , especially on holidays/weekly offs or being on leave, but now SMS will be delivered and seen immediately, thus speeding up the notification and decision making process.

Offline Functionality:

  • New features added
  • Presently available for Add security Interest and Attachment Order Transactions
  • Details of the transactions are now recorded in an excel file downloaded from CERSAI Portal
  • Any employee of the entity can perform this activity.
  • No need to have a CERSAI User ID/Password
  • No need to have a valid Digital Signature.
  • Most of the data validations applied for correct details to be recorded.
  • One file to have one Record but many files can be prepared simultaneously for different records.
  • Entities can prepare files programmatically also by extracting data from core banking solution(CBS)
  • Details of the offline file prepared will be uploaded in CERSAI by an authorized User of the entity using valid CERSAI ID/Password and a valid digital signature.

Other New Features :

  1. Save as Draft Option are now available for the following core business transactions:
  • Registration of Security Interest and Attachment Order
  • Registration of Asset Reconstruction and securitization transactions
  • Registration of Assignment of Receivables
  1. User can resume the same transaction under My Worklist In User drafted transactions from the Home page itself after successful login
  2. Drafts will be kept in the system for 24 hours only, and limit of the drafts for user are presently capped at 10
  3. Those who are Maker users in CERSAI 1.0 can directly log into CERSAI 2.0 without Digital Signature and can have access to search and Report Modules only namely Asset based search, Debtor based search, AOR search, Online Reports, MIS Reports and Batch Reports
  4. Exact ID based search is available in CERSAI 2.0 on the basis of the following parameters namely security interest ID, Transaction ID, Assignment of Receivables(AOR) ID.
  5. There is no loan details available in CERSAI 2.0. Users can put the loan number under security interest details tab in entity identification number field. If there is a change in Total Secured Amount, then User can change the Total Secured Amount in SI Modification else there is no change required in the details
  6. In case of multiple loans under the same asset, user can select the existing asset and can create another security interest id and can mention the 2nd loan account number along with the first loan account number, already available in the field, under security interest details tab in entity identification number field.

Recent changes in CERSAI

Govt. of India vide notification dated 12th August, 2016 had inserted Chapter IV –A in the SARFAESI Act, 2002. The same is in force from  24th  January, 2020 as notified in Government of India Gazette No.4133 dated 26th December, 2019.The salient features of Chapter IV-A includes:

  1. Creditors other than Secured Creditors (as defined under section 2(1)zd of SARFAESI Act), in whose favour security interest is created have to file the same with CERSAI.
  2. Filing of security interest with CERSAI shall be deemed to constitute a Public notice from the date and time of filing with CERSAI.
  • Attachment orders issued by Revenue Authorities for recovery of Govt. dues are required to be filed with CERSAI.
  1. Attachment orders issued in favour of any person, by Courts/Tribunals are required to be filed with CERSAI.
  2. Secured Creditors [as defined under section 2(1)(zd)] shall be entitled to enforce securities under SARFAESI Act only if the security interest is filed with CERSAI.
  3. Filing of Security interest or attachment orders with CERSAI shall have priority over any subsequent security interest created upon such property.
  • After registration of security interest with CERSAI by secured creditors, their dues will be paid in priority over Government dues.
  • Penalty provisions for default in filing, modifying and satisfaction of security interest (section 27) is no longer applicable.
  1. 30-day time period for filing the transactions of creation/ modification of security interest with CERSAI (section 23) is no longer applicable.

Hence the new version of CERSAI has come up to overcome some technical flaws of the previous one. However, the benefits and major changes that  CERSAI 2.0 has brought are yet to be seen.

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