India will have a complete database of all properties mortgaged with financial institutions in the country by the end of next month. A Central Registry, recently set up by the government, will record all mortgaged transactions by September 2012.
The Central Electronic Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) became operational on March 31, 2011. It has been promoted by the central government to prevent frauds involving multiple lending by different banks on the same immovable property.
The Centre has 51% stake in CERSAI and the remaining is held by select public sector banks and the National Housing Bank (NHB). CERSAI has so far recorded 60 lakh property transactions on which mortgages have been created. The registry is now recording both subsisting as well as new mortgages in its database.
?The central registry will include 100% data on mortgaged properties by September-end 2012,? said NHB CMD RV Verma. There will be about 70 lakh total transactions, accounting for nearly R7 lakh crore of existing mortgage debt in the country, he said. Financial institutions create mortgages worth R1.3 lakh crore every year. As of now, CERSAI has recorded 60 lakh mortgage transactions.
CERSAI was created to overcome a major drawback in the Indian mortgage market, wherein a charge created on a property hitherto remained known to only the lender and the borrower. This enabled the borrowers to mortgage the same property to multiple lenders using duplicate sale deeds obtained from the registrars? offices, or even through forged documents. The registry plugs this key loophole and brings about transparency in the mortgage market.
With introduction of the registry, the government made it mandatory for all banks and financial institutions to register the mortgage created ? or the security interest over property to secure loans ? with CERSAI, within 30 days of creation of mortgage. CERSAI will also enable the general public to verify title and mortgage status of a property before buying it.
The registry has been set up under the provisions of the Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act of 2002.