Is CERSAI Registration Mandatory for NBFCs in India?

Is CERSAI Registration Mandatory for NBFCs in India?. Non-Banking Financial Companies (NBFCs) have become an indispensable part of India’s financial sector, serving as vital credit providers, especially in underserved regions. However, the growing complexity of lending brings with it a higher risk of financial frauds, such as the same asset being pledged to multiple lenders. To counter such risks, the Government of India established the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). This centralized registry has become a key compliance requirement for secured lending transactions. While there is often confusion around whether CERSAI registration is mandatory for NBFCs, regulatory developments and Reserve Bank of India (RBI) guidelines have made it essential. This article covers the objectives, importance, process, and benefits of CERSAI registration for NBFCs and how Compliance Calendar supports this registration effortlessly.
What is CERSAI?
CERSAI is a government-backed entity created under Section 20(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It serves as a central registry for recording all security interests created by lenders over movable and immovable properties. The core objective of CERSAI is to prevent multiple loans being availed using the same collateral and to maintain a transparent database of all such transactions.
The registry plays an important role in improving financial discipline and ensuring that lenders have legal rights over secured assets. With the Government of India holding a majority shareholding of 51%, the registry operates under strong regulatory oversight and provides an accessible platform for all financial stakeholders.
Objective and Applicability of CERSAI
The main objective of CERSAI is to build a centralized database that contains the details of all security interests created across lending institutions. It aims to eliminate frauds arising out of multiple burdens on the same asset. The system allows any person or entity to search the registry after making a nominal payment. 
Over the years, the applicability of CERSAI has broadened. Initially intended for banks and notified financial institutions, it now extends to all NBFCs, Small Finance Banks, Cooperative Banks, Housing Finance Companies, Asset Reconstruction Companies, and even to individuals and sole proprietors acting as secured creditors.
CERSAI’s scope was further extended in 2012 through the Factoring Regulation Act, 2011, which mandated the registration of factoring transactions and assignments of receivables. Today, all security interests created on both tangible and intangible assets are to be registered within 30 days of creation. This ensures all lenders maintain updated records and prevent lending mishaps due to incomplete due diligence.
Importance of CERSAI Registration for NBFCs
For NBFCs, securing loans with assets is standard practice. However, without a centralized registry, it is impossible to verify if an asset is already pledged to another financial institution. This creates an enormous risk of double financing and financial fraud. CERSAI registration is therefore crucial for NBFCs to safeguard their interests, establish clear ownership, and maintain trust in lending operations.
CERSAI provides NBFCs with the ability to verify the ownership and lien status of assets offered as collateral. This improves their confidence in loan security and enhances credit appraisal processes. In addition to reducing fraudulent activity, it also acts as a preventive tool against legal disputes arising from contested ownership or prior charges. More importantly, CERSAI registration positions the NBFC as a compliant and responsible lender, boosting its credibility in the financial ecosystem.
Purpose of CERSAI Registration
The core purpose of registering with CERSAI is to maintain a public registry of security interests created over assets. It provides transparency and legal strength to the charge holder. One of the main goals is to reduce the occurrence of multiple loans against the same asset, which can result in significant losses for financial institutions.
Another major purpose is to support the due diligence process undertaken by lenders before sanctioning loans. With access to the CERSAI portal, NBFCs can easily check whether a potential borrower has already used the same asset for another loan. This registry also serves as a strong legal document during asset recovery procedures, giving registered lenders priority over unregistered ones in enforcement proceedings.
Benefits of CERSAI Registration for NBFCs
CERSAI registration offers multiple benefits to NBFCs, ensuring both operational efficiency and legal protection. One of the foremost benefits is fraud prevention. By accessing CERSAI’s centralized database, NBFCs can check whether the collateral offered has been used elsewhere, effectively preventing double pledging and related fraudulent activities.
Another important benefit is improved credit risk management. Since CERSAI offers a complete view of previously registered charges, NBFCs can make informed decisions, thereby reducing the likelihood of lending to high-risk borrowers. This also helps in identifying potential red flags during credit assessment.
Legally, CERSAI registration provides NBFCs with a superior claim over assets. In case of a loan default, a registered charge with CERSAI serves as strong evidence in legal proceedings, improving the chances of asset recovery. Moreover, CERSAI compliance aligns NBFCs with RBI guidelines, thereby reducing the risk of regulatory penalties and maintaining a healthy reputation in the industry.
Another notable advantage is the faster processing of loans. With real-time asset data available, NBFCs can shorten their turnaround time on loan decisions. This not only benefits the lender but also enhances customer satisfaction. CERSAI registration also reduces the incidence of non-performing assets (NPAs), since it ensures secured lending practices are based on verified asset data.
Transparency and access to market-wide data also improve. CERSAI allows NBFCs to analyse borrower patterns, assess creditworthiness, and align their lending strategies with market trends. Ultimately, this instils greater confidence among investors and stakeholders about the NBFC’s governance and risk management standards.
Is CERSAI Registration Mandatory for NBFCs?
Technically, not all NBFCs are explicitly mandated under the SARFAESI Act to register with CERSAI. However, in practice, CERSAI registration has become mandatory through a series of circulars issued by the Reserve Bank of India. In 2013, RBI directed all NBFCs to register any equitable mortgages created in their favour after March 31, 2011. This also includes all security interests on movable assets or intangible assets like receivables.
The directive clearly instructs NBFCs to file and register such charges within 30 days of their creation. Failure to do so may lead to loss of legal standing in case of borrower default. With the launch of CERSAI 2.0 in August 2020, the government strengthened the compliance system, introducing better functionality and broader scope. Thus, while the law may not specify all NBFCs, regulatory expectations and practical necessity make CERSAI registration obligatory for all secured lenders.
How CERSAI Registration Works for NBFCs?
CERSAI registration for NBFCs involves a few systematic steps. Once an NBFC receives a request for a secured loan, it first conducts an internal verification of the asset details and ownership documents. After confirming that the asset is suitable as collateral, the NBFC initiates the process of registering the charge on the CERSAI portal.
The next step involves data entry of the secured loan transaction. The NBFC inputs details such as the type of asset (movable or immovable), loan amount, security interest created, and tenure. Once all data is validated, the information is submitted for approval. Upon successful submission, a unique CERSAI ID is generated, confirming the creation of the charge. The NBFC can also update, modify, or satisfy the charge when the loan is repaid or restructured. These steps ensure that the registry remains up to date and trustworthy.
CERSAI Registration Process for NBFCs
The process begins with the NBFC registering itself on the CERSAI portal. The entity must have a valid Class III Digital Signature Certificate (DSC) or access to CKYC information. On the portal, the NBFC selects the “Entity Registration” tab and fills in its name, registration number, contact information, and address. It then selects the mode of registration—either through DSC or CKYC—and completes the form.
Once registration is approved, the NBFC can log into the portal and upload security interest details. Different forms are to be used for different types of charges. For instance, Form I is used for the creation or modification of charges over immovable property. If the loan amount is above Rs.5 lakh, the registration fee is Rs.100; for loans below Rs.5 lakh, the fee is Rs.50. Form II is used for the satisfaction of a registered security interest and carries no fee. Form III pertains to securitisation or asset reconstruction, with a fee of Rs.500, while Form IV is for satisfying such transactions and costs Rs.50. A nominal fee of Rs.10 is required for accessing registry search information.
Late submissions can attract steep penalties. If the charge is filed between 10 and 20 days late, a penalty of ten times the basic fee applies. Beyond 20 days, NBFCs must obtain prior government approval for condonation of delay, in addition to paying the penalty. Hence, timely filing is critical.
Conclusion
While CERSAI registration may not have started as a legal mandate for all NBFCs, over time, it has become an industry-standard practice driven by RBI guidelines and evolving financial norms. Today, it is essential for every NBFC engaged in secured lending to register with CERSAI to protect its financial interests, reduce risk exposure, and comply with regulatory expectations.
CERSAI offers NBFCs the ability to conduct secure, transparent, and compliant lending. With a centralized registry in place, the chances of fraud, default, and legal disputes reduce significantly. By registering their charges within the prescribed time frame and maintaining updated records, NBFCs not only protect themselves but also gain the trust of regulators, investors, and borrowers.
With professional support from Compliance Calendar, NBFCs can simplify the entire process, from registration to post-compliance advisory, and focus on scaling their business in a secure and legally sound manner. You can connect with us through mail through at info@ccoffice.in or Call/Whatsapp at +91 9988424211.

Non-Banking Financial Companies (NBFCs) have become an indispensable part of India’s financial sector, serving as vital credit providers, especially in underserved regions. However, the growing complexity of lending brings with it a higher risk of financial frauds, such as the same asset being pledged to multiple lenders. To counter such risks, the Government of India established the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). This centralized registry has become a key compliance requirement for secured lending transactions. While there is often confusion around whether CERSAI registration is mandatory for NBFCs, regulatory developments and Reserve Bank of India (RBI) guidelines have made it essential. This article covers the objectives, importance, process, and benefits of CERSAI registration for NBFCs and how Compliance Calendar supports this registration effortlessly.

What is CERSAI?

CERSAI is a government-backed entity created under Section 20(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It serves as a central registry for recording all security interests created by lenders over movable and immovable properties. The core objective of CERSAI is to prevent multiple loans being availed using the same collateral and to maintain a transparent database of all such transactions.

The registry plays an important role in improving financial discipline and ensuring that lenders have legal rights over secured assets. With the Government of India holding a majority shareholding of 51%, the registry operates under strong regulatory oversight and provides an accessible platform for all financial stakeholders.

Objective and Applicability of CERSAI

The main objective of CERSAI is to build a centralized database that contains the details of all security interests created across lending institutions. It aims to eliminate frauds arising out of multiple burdens on the same asset. The system allows any person or entity to search the registry after making a nominal payment.

Over the years, the applicability of CERSAI has broadened. Initially intended for banks and notified financial institutions, it now extends to all NBFCs, Small Finance Banks, Cooperative Banks, Housing Finance Companies, Asset Reconstruction Companies, and even to individuals and sole proprietors acting as secured creditors.

CERSAI’s scope was further extended in 2012 through the Factoring Regulation Act, 2011, which mandated the registration of factoring transactions and assignments of receivables. Today, all security interests created on both tangible and intangible assets are to be registered within 30 days of creation. This ensures all lenders maintain updated records and prevent lending mishaps due to incomplete due diligence.

Importance of CERSAI Registration for NBFCs

For NBFCs, securing loans with assets is standard practice. However, without a centralized registry, it is impossible to verify if an asset is already pledged to another financial institution. This creates an enormous risk of double financing and financial fraud. CERSAI registration is therefore crucial for NBFCs to safeguard their interests, establish clear ownership, and maintain trust in lending operations.

CERSAI provides NBFCs with the ability to verify the ownership and lien status of assets offered as collateral. This improves their confidence in loan security and enhances credit appraisal processes. In addition to reducing fraudulent activity, it also acts as a preventive tool against legal disputes arising from contested ownership or prior charges. More importantly, CERSAI registration positions the NBFC as a compliant and responsible lender, boosting its credibility in the financial ecosystem.

Purpose of CERSAI Registration

The core purpose of registering with CERSAI is to maintain a public registry of security interests created over assets. It provides transparency and legal strength to the charge holder. One of the main goals is to reduce the occurrence of multiple loans against the same asset, which can result in significant losses for financial institutions.

Another major purpose is to support the due diligence process undertaken by lenders before sanctioning loans. With access to the CERSAI portal, NBFCs can easily check whether a potential borrower has already used the same asset for another loan. This registry also serves as a strong legal document during asset recovery procedures, giving registered lenders priority over unregistered ones in enforcement proceedings.

Benefits of CERSAI Registration for NBFCs

CERSAI registration offers multiple benefits to NBFCs, ensuring both operational efficiency and legal protection. One of the foremost benefits is fraud prevention. By accessing CERSAI’s centralized database, NBFCs can check whether the collateral offered has been used elsewhere, effectively preventing double pledging and related fraudulent activities.

Another important benefit is improved credit risk management. Since CERSAI offers a complete view of previously registered charges, NBFCs can make informed decisions, thereby reducing the likelihood of lending to high-risk borrowers. This also helps in identifying potential red flags during credit assessment.

Legally, CERSAI registration provides NBFCs with a superior claim over assets. In case of a loan default, a registered charge with CERSAI serves as strong evidence in legal proceedings, improving the chances of asset recovery. Moreover, CERSAI compliance aligns NBFCs with RBI guidelines, thereby reducing the risk of regulatory penalties and maintaining a healthy reputation in the industry.

Another notable advantage is the faster processing of loans. With real-time asset data available, NBFCs can shorten their turnaround time on loan decisions. This not only benefits the lender but also enhances customer satisfaction. CERSAI registration also reduces the incidence of non-performing assets (NPAs), since it ensures secured lending practices are based on verified asset data.

Transparency and access to market-wide data also improve. CERSAI allows NBFCs to analyse borrower patterns, assess creditworthiness, and align their lending strategies with market trends. Ultimately, this instils greater confidence among investors and stakeholders about the NBFC’s governance and risk management standards.

Is CERSAI Registration Mandatory for NBFCs?

Technically, not all NBFCs are explicitly mandated under the SARFAESI Act to register with CERSAI. However, in practice, CERSAI registration has become mandatory through a series of circulars issued by the Reserve Bank of India. In 2013, RBI directed all NBFCs to register any equitable mortgages created in their favour after March 31, 2011. This also includes all security interests on movable assets or intangible assets like receivables.

The directive clearly instructs NBFCs to file and register such charges within 30 days of their creation. Failure to do so may lead to loss of legal standing in case of borrower default. With the launch of CERSAI 2.0 in August 2020, the government strengthened the compliance system, introducing better functionality and broader scope. Thus, while the law may not specify all NBFCs, regulatory expectations and practical necessity make CERSAI registration obligatory for all secured lenders.

How CERSAI Registration Works for NBFCs?

CERSAI registration for NBFCs involves a few systematic steps. Once an NBFC receives a request for a secured loan, it first conducts an internal verification of the asset details and ownership documents. After confirming that the asset is suitable as collateral, the NBFC initiates the process of registering the charge on the CERSAI portal.

The next step involves data entry of the secured loan transaction. The NBFC inputs details such as the type of asset (movable or immovable), loan amount, security interest created, and tenure. Once all data is validated, the information is submitted for approval. Upon successful submission, a unique CERSAI ID is generated, confirming the creation of the charge. The NBFC can also update, modify, or satisfy the charge when the loan is repaid or restructured. These steps ensure that the registry remains up to date and trustworthy.

CERSAI Registration Process for NBFCs

The process begins with the NBFC registering itself on the CERSAI portal. The entity must have a valid Class III Digital Signature Certificate (DSC) or access to CKYC information. On the portal, the NBFC selects the “Entity Registration” tab and fills in its name, registration number, contact information, and address. It then selects the mode of registration—either through DSC or CKYC—and completes the form.

Once registration is approved, the NBFC can log into the portal and upload security interest details. Different forms are to be used for different types of charges. For instance, Form I is used for the creation or modification of charges over immovable property. If the loan amount is above Rs.5 lakh, the registration fee is Rs.100; for loans below Rs.5 lakh, the fee is Rs.50. Form II is used for the satisfaction of a registered security interest and carries no fee. Form III pertains to securitisation or asset reconstruction, with a fee of Rs.500, while Form IV is for satisfying such transactions and costs Rs.50. A nominal fee of Rs.10 is required for accessing registry search information.

Late submissions can attract steep penalties. If the charge is filed between 10 and 20 days late, a penalty of ten times the basic fee applies. Beyond 20 days, NBFCs must obtain prior government approval for condonation of delay, in addition to paying the penalty. Hence, timely filing is critical.

Conclusion

While CERSAI registration may not have started as a legal mandate for all NBFCs, over time, it has become an industry-standard practice driven by RBI guidelines and evolving financial norms. Today, it is essential for every NBFC engaged in secured lending to register with CERSAI to protect its financial interests, reduce risk exposure, and comply with regulatory expectations.

CERSAI offers NBFCs the ability to conduct secure, transparent, and compliant lending. With a centralized registry in place, the chances of fraud, default, and legal disputes reduce significantly. By registering their charges within the prescribed time frame and maintaining updated records, NBFCs not only protect themselves but also gain the trust of regulators, investors, and borrowers.

With professional support from Compliance Calendar, NBFCs can simplify the entire process, from registration to post-compliance advisory, and focus on scaling their business in a secure and legally sound manner. You can connect with us through mail through at info@ccoffice.in or Call/Whatsapp at +91 9988424211.