Frequently Asked Questions
What is Secured Transaction Registry?
The Secured Transaction Registry is a database in which secured creditors (Financial institutions, leasing companies and private lenders) can give notice of their security interests in movable goods of an enterprise or individual. The Registry also provides for interested parties to search (query) to find if there are prior security interests in goods pledged by a debtor.
How it contributes to the economy?
The overarching goal of Secured Transaction Registry is to reduce risks associated with extending credit, thereby increasing opportunities for economic expansion. Providing legal structures through which movable assets in emerging markets can be effectively used as collateral will significantly improve access to finance in the economy. Well-functioning secured transactions systems enable businesses to use their assets as security to generate capital—from the farmer pledging his cows as collateral for a tractor loan, to the seller of goods or services pledging the cash flow from customer accounts as collateral for business expansion. It allows SME’s to use movable goods as collateral to gain credit. This legislation would also allow creditors to seize goods in the event of default without having to go through the lengthy and costly court processes and judicial sale.
How it is different from Credit Information Bureau?
Credit Information Bureau collects and collates the credit information of the borrowers who borrow from lending institutions against their immovable assets where as Secured Transaction Registry collects the information of all the lending made in the economy by the individuals or institutions against their movable assets.
What information is to be provided from the Registry?
The Registry is obligated to provide the following information:
- Whether or not any notice mentioning the name of any particular security giver has been registered by the registry on any specified date and time,
- Whether or not any notice which has not expired as to all security holders has been registered by the Registry on any specified date and time,
- The file number of every notice, and the date and time of its filing,
- The names and addresses of the security giver and the security holder mentioned in every notice,
- Description of the collateral mentioned in every notice or amendment notice, and
- The file number of each document connected with every original notice, the date and time of its filing, and particulars which help to identify whether the document is an amendment, correction statement, statement of continuity, or termination statement.
Who regulates Secured Transaction Registry?
Secured Transaction Registry office is regulated by Ministry of Finance.
What is the difference between Client and Non Client?
Clients are the regular user of the service and have their own account in the Registry. The Clients may have many authorized users who will be using the service under the client’s account.
Non clients are one time or infrequent users of the service and do not possess any operating account with the registry.
What is Security Administrator?
Client account may have any number of authorized users. At least one of the authorized users will be assigned as security administrator. Security administrator will maintain all associated users and general account information and will be the point of contact for communication with the registry. Security Administrator will have additional rights beyond those of general users. Those rights will include the right to add or delete authorized users, and to update information about the client account (for example, an address change). General users will have the right to file notices, search for notices and change their own passwords.
Can there be more than one security administrator?
Yes, the Client account can have more than one security administrator. If the expected volume of transactions (registration of notices) in the company is large, it is better to have two security administrators to effectively monitor the authorized users and the account. Apart from this, two security administrators can help each other if one abstains from the job or if one’s user name is locked by the system.
How many authorized users that the client can have?
The client can have as many authorized users as he/she seems necessary.
How can the Security Administrator debar the service of its users?
If the security administrator wants to temporarily debar the service of its user, he/she can change the user status to “Block” for some time and re-activate again. If the administrator wants to permanently debar the service, it can completely delete the user profile from the system. Once deleted, it can not be reactivated and the new user profile has to be created if the same user has to be activated again.
Can the system debar the service of the user?
System blocks the service when the system finds too many unsuccessful attempts to log in by the user. Once deactivated, the user can approach the security administrator to put its status into active mode.
How can the security administrator find the user that committed the data entry errors while filing the notice?
The security administrator can view the “View Statement/Account Information” where details about the Date, Web session ID, Transaction Type and Registration Number are given along with the User who registered the information. The security administrator can scroll the information date wise to find the user that committed the data entry errors.
What will happen if the client mistakenly deposited the money in non client account rather than his client account?
Usually all the payments made without a client account go into unused bank receipt account of the registry. The client can access the Technical Support Desk of the Registry and request to transfer the money from the unused bank receipt account to his client account. The client must provide the bank receipt number and client account to the Tech Support Desk of the registry who will then transfer the amount to the client account as requested.
Is there a limit on the number of debtors and secured parties that can be included on a notice of security interest?
No, client and non clients can register as many secured parties or debtors as their security agreement or security interest notice demands.
How the collateral description can be entered?
A notice must include a description of the collateral which is covered by the security interest. The description may be entered in one or more of three description formats: (i) it may be entered in an unformatted narrative field with unlimited length; (ii) if the collateral is vehicle, the serial number may be filled in the serial number field, which may be repeated for an unlimited number of serial numbers; and (3) if the user has a long description in an existing document, the document may be converted into a PDF file by the user, and then attached to the registration record by browsing to and selecting it from the user’s computer. The narrative description is not a searchable field, though the serial number field is searchable. If the registrant enters no description in any of the three modes, the registry software will reject the notice.
The serial number of the vehicle is not the license plate number. It is the vehicle identification number that is assigned by the vehicle manufacturers for its identification purposes.
Can we attach the security agreement, amount of debt, payment terms, or other any financial information as a PDF in the collateral information?
No, we recommend not doing so. Since all the information will be registered as public records and are for public notice, it is better that the confidential information should not be attached. Only collateral information either in the form of description, vehicle serial number and its PDF should be attached.
What does Prior Transaction mean in the initial notice registration?
Prior transaction relates to the security agreements that were made prior to the start up date of the registry. During a transition period of one year from the date of start-up of the registration office, this check box will be enabled to permit the registrant to indicate that the notice relates to a transaction that occurred prior to start-up date of the registry. If that indicator is checked, the system will open a formatted field for entry of the date of the agreement that created the prior interest, which must pre-date the date of commencement of registry operation. If the indicator is checked and a valid date is entered, the system will fill an Effective Date field with the date of registry start-up.
The indicator and date fields will be disabled for further entry by the Registry Administrator upon the end of the transition period.
Why is “Other information” field necessary?
If the registrant intends to add any additional information related with the debtor, he/she may do so. The information may be related with the debtor’s business, scale and size of its operations, its turn over, number of staffs or any other information.
If some errors were made inadvertently in the notice registration, Can it be corrected? Can the registrant request registry administrator to correct it?
No, once the initial notice has been filed, the registry administrator can not make the changes or make corrections on registered notice. The registrant has to go for “Change Notice” and select “Amendment” to make the necessary amendments to correct the notice.
In case of Inventory as collateral, must the secured party file a new notice or an amended notice whenever the debtor (merchant) receives new inventory?
No. Collateral descriptions may be general, so they can be broad enough to include property acquired after the initial notice is filed. A description of “All inventory” or “All inventory now in existence or hereafter acquired” is sufficient for that purpose. The same is true of other types of collateral such as accounts receivable and equipment.
Will the entry of wrong file number during “Change Notice” leads to the changes in someone else notice?
The registry software will assign a unique number to each new notice registered by the users. This number includes a self validating feature, so if an error is made in entering it in the File Change Notice screen, the system will catch the error and give you an error message.
How does the correction statement differ from amendment statement?
A notice of correction is registered by a debtor where as notice of amendment is registered by a secured party. Correction statement is registered if the debtor believes that an initial notice or its amendments have been wrongfully registered by the secured party or has errors on it. Though registered, the notice of correction does not affect the effectiveness of the initial notice nor change any information in the notice.
Amendment notice is registered by the secured party either to add or amend the existing information on the initial notice.
When the Continuation Statement can be registered?
Initial notice is valid for five years. A continuation notice may only be registered within the six-month period ending the expiration date of the notice. If a user attempts to register a continuation notice at a time earlier than six-month period of the expiration date, the system will reject it.
Can the non client user make the registration immediately after the payment of fees?
Yes. Once the user makes the payment of fees in the Bank, Bank gives one copy of the payment slip to the user and another copy is sent electronically to the registry office. The user can immediately log in to the system by entering the bank receipt number and register the notices or do certified searches.
If the non client pays for five notices but registers only two notices due to some reasons. Can the non client use the remaining payment for future transactions or refund the amount?
Yes, he/she can do so. At any later date, the non client may enter the same bank receipt number and log in to the system to register notices or do certified searches for the remaining balance. If the non client decides not to make transactions, he can request for refund from the Registry.
What is the difference between a General Search Report and Certified Search Report?
Both the reports are identical except that certified search report contains the additional authentication by the registry about the validity of the report. Such kinds of report may be needed when the user wants to prove priority position on collateral in courts. Other wise, general report is equally valid and can give sufficient proof of the state of the record.
Is the searching by vehicle serial number a reliable means of knowing the priority on collateral?
No. Very often, a secured party may secure its priority on a vehicle against other secured parties by describing it without the serial number in the notice. Thus while searching with the serial number of the vehicle, the vehicle may not be traceable. So if someone is interested to take a security interest in a vehicle, it is always better to search by the debtor’s name.
So, if a search report shows that a termination statement has been filed, does that mean that the initial notice to which it is related is no longer effective?
No. in order for the initial notice to be ineffective, all the secured parties as listed in the initial notice and amended notices must authorize the termination. If any secured party does not authorize the termination, the notice still remains valid and effective as to that secured party.