Money & Banking

RBI may buy out Centre’s 51% stake in CERSAI

K Ram Kumar Mumbai | Updated on March 22, 2021

The Central Registry was set up in 2011 to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property

The Reserve Bank of India (RBI) may pick up the Government’s 51 per cent stake in the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).

CERSAI, which is a Government of India company, operates the central registry dealing with the filing of security interest of immovable, movable, intangible properties and assignment of receivables, among others, by lenders.

As these activities are essentially related to banks and non-banking finance companies, the finance ministry is believed to have sought RBI’s opinion on the possibility of it picking up the Government’s entire stake, said an official of one of the company’s shareholders.

RBI will be better placed to further develop and regulate CERSAI, he added.

While the Centre holds 51 per cent stake in CERSAI, the balance 49 per cent stake is held by select public sector banks, including State Bank of India, Punjab National Bank and Bank of Baroda, and the National Housing Bank.

CERSAI was set up in 2011 under Section 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The company is licensed under Section 25 of the Companies Act 1956.

May need amendment to SARFAESI Act

An amendment to the SARFAESI Act may be needed so that RBI can pick up the Government’s 51 per cent stake in CERSAI, said a senior public sector bank official.

The Central Registry was set up in 2011 to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property.

As per a 2011 RBI notification, the records maintained by the Central Registry are available for search by any lender or any other person desirous of dealing with the property.

Availability of such records can prevent frauds involving multiple lending against the security of same property as well as fraudulent sale of property without disclosing the security interest over such property, it added.

CERSAI has also been entrusted with the responsibility of operating and maintaining a Central KYC Record Registry (CKYCRR), which started operating from 2016. This registry is governed under the Prevention of Money Laundering Rules 2005 (Maintenance of Records).

The CKYCRR caters to Reporting Entities (REs) of all four major regulators of the financial sector — RBI, SEBI, IRDAI and PFRDA.

Published on March 22, 2021

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