Meeting of the CEO’s of HFCs, Banks & RRBs
National Housing Bank
New Delhi
March 17, 2010

Need for a Registry of Mortgages

Provisions for setting up of a Registry

SARFAESI Act Central Registry [ I, II, III]

IBA Working Group [ I, II]

IBA WG Recommendations [I, II]

Further Developments


Mortgage by deposit of title deeds (equitable
mortgage) provided by section 58(f) of the
Transfer of Property Act, 1882 is not required
to be registered and there is no requirement
of recording any written document for
creation of such mortgage.
Taking advantage of this situation, a number
of frauds have taken place by depositing
multiple documents of title relating to the
same property.

The Securitisation And Reconstruction of
Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI Act) contains
provisions for setting up a registry for
registration of transactions relating to
 Securitisation of Financial Assets,
 Reconstruction of Financial Assets and
 Creation of Security Interest.

SARFAESI Act 2002 [Chapter IV]
◦ Sections 20, 21, 22
[Central Registry, Central Registrar and Central Register]
 GOI may by notification set up or cause to be setup the
Central Registry
 GOI may by notification appoint Central Registrar
 Central Register shall be kept at the head office of the
Central Registry under the control and management of
Central Registrar.

SARFAESI Act 2002 [Chapter IV]
◦ Sections 23, 24, 25
 Filing of transactions of securitisation, reconstruction
and creation of security interest
 Modification of security interest registered under the
act
 Reporting of satisfaction by Securitisation company,
reconstruction company or secured creditor
◦ Section 26
 Right to inspect particulars of securitisation …

SARFAESI Act 2002 [Chapter IV]
◦ Section 31
 Not applicability of the act to ….. (h) financial asset not
exceeding Rs. 1 lakh, (i) security interest created in
agricultural land, and (j) when amount due is less than
20% of principal plus interest
◦ Section 38
 Power of Central Government to make rules …
◦ Section 39
 Provisions of section 21(2-4), 22 – 27 to apply after
Central Registry is set up


The need for a registry of mortgages and the
possibility of setting up a registry under the
SARFAESI Act required further examination to
prepare firm ground for creation of Central
Registry
For this purpose at the instance of the GOI a
Working Group was set up by Indian Banks
Association in January 2009 under the
chairmanship of Mr. S. Sridhar, CMD National
Housing Bank
The terms of reference of the working group
included to examine:
Constitution of a SPV for setting up of CER
The possibility of limiting entries into the Registry to
only those related to mortgage of title deeds and
subsequent expansion of its scope
To frame rules/design forms/draft notification for
giving effect to operationalisation of CER

The Working group submitted its report in June
2009. The recommendations by the WG included
the following:
◦ The CER may initially be set up for the purpose of
registration of mortgages by deposit of title deeds
in favour of banks and financial institutions.
◦ The registration system can be extended to other
categories of transactions in a phased manner after
the set up of the registration system stabilizes
◦ A new / existing company with a defined
shareholding pattern can be appointed as the
central registry to undertake the registry activities
as contemplated under the SARFAESI Act.
◦ The Central Registrar appointed by the Central
Government will serve as ex-officio Chairman of
company.
◦ The Memorandum and Articles of Association of the
company to include clauses specified by the Central
Government
◦ All forms and fees for various functions by the registry
be prescribed and processed in terms of rules framed
under the SARFAESI Act

The WG suggested a revenue model and
operations model
for the Central Registry
Company. It also provided estimates for IT costs.
Payment
Direct Access by User
Payment
Offline Customer
Tower box
Access by User through
Service Providers
User
Securitization or Reconstruction Company/Secured Creditor/Borrower
Service Provider
Central Registry Company empanelled Service Providers-Banks, Depository Participants, Internet Kiosks etc.
Website
Website of the Central Registry Company
Payment Gateway
Payments via internet transfer/RTGS/NEFT/ECS
Central
Server/Database


Since the WG has submitted its
recommendations they have been discussed
with the RBI and others. As a result there has
been a lot of change in the understanding of
CER.
Central Government has made an allocation
of Rs. 25 crores towards capital for setting up
of Central Electronic Registry in its proposal
for Budget 2009-10.
[ Budget 2009 - 10 : Part V : Expenditure Budget
Volume II : Demand No. 33 : A 26]