Creation and Registration of Charges: CAIIB BRBL Guide (2026)

For any banker, security is only as strong as the paperwork behind it. The creation and registration of charges is the legal process that converts a borrower's asset into an enforceable banker's security — and gets that security recorded on a public register so the bank's claim ranks ahead of everyone else's. This is one of the most examined areas in CAIIB Banking Regulations and Business Laws (BRBL), because a single missed deadline can turn a fully secured loan into an unsecured one. In this 2026 guide we walk through what a charge is, the difference between fixed and floating charges, the exact timelines under the Companies Act 2013, and how CERSAI registration decides who gets paid first.

Whether you are appearing for CAIIB or simply want cleaner documentation practice at the branch, mastering the creation and registration of charges pays off in both the exam hall and the recovery department.

📌 What a Charge Means and Why Banks Register It

A charge is a right created by a borrower (the chargor) over its assets in favour of a lender (the chargee) to secure repayment of a debt. Unlike an outright sale, a charge does not transfer ownership — it creates an interest that the bank can enforce if the borrower defaults. In banking, charges arise through several modes: mortgage over immovable property, hypothecation over movable stock and machinery, pledge over goods delivered to the bank, and assignment of receivables or life-insurance policies.

Creation alone is not enough. Under the Companies Act 2013, a company that creates a charge on its assets must register it with the Registrar of Companies (ROC). Registration serves three purposes: it gives public notice so third parties cannot claim ignorance, it fixes the priority order among competing lenders, and it is a condition for the charge to be admitted as evidence in liquidation. An unregistered charge is void against the liquidator and other creditors, even though the loan itself remains payable. That is why documentation teams treat charge registration as a hard, non-negotiable step. To see how this fits the wider syllabus, revise the chapter on the creation, registration and satisfaction of charges before moving to the timelines.

⚠️ Common Mistake: Students assume an unregistered charge is completely invalid. It is not — the underlying debt is still recoverable. What becomes void is the security interest against the liquidator and other creditors, so the bank drops to unsecured status.

⚖️ Fixed Charge vs Floating Charge

The two classic species of charge behave very differently, and BRBL loves to test the distinction. A fixed charge attaches to a specific, identifiable asset — land, a building, a particular machine — from the moment it is created. The company cannot sell or deal with that asset freely without the lender's consent. Because it is asset-specific, a fixed charge gives the strongest priority.

A floating charge, by contrast, hovers over a shifting class of assets such as stock-in-trade, raw materials, or book debts that the company buys and sells in the ordinary course of business. The borrower can trade with those assets until a triggering event — default, winding up, or a notice of crystallisation — converts the floating charge into a fixed one. This conversion is called crystallisation. Until it crystallises, a floating charge ranks below later fixed charges and below preferential creditors in liquidation.

For working-capital finance, banks typically take a floating charge (hypothecation) over current assets combined with a fixed charge (mortgage) over factory land. Understanding which assets are covered, and when crystallisation happens, tells you how much the bank can actually recover. This also links to how banks are supervised and organised — brush up with the chapter on control over the organisation of banks for the regulatory backdrop.

💡 Exam Tip: Priority rule to memorise — a registered fixed charge beats a floating charge over the same asset, and a floating charge that has crystallised ranks by its original creation date, not the crystallisation date.

🗓️ Registration Timelines Under the Companies Act 2013

Section 77 of the Companies Act 2013 requires a company to register every charge it creates with the ROC. The base timeline is 30 days from the date of creation of the charge. Recognising that filings slip, the law provides extensions on payment of additional fees. For charges created on or after 2 November 2018, the ROC may allow registration within a further 30 days (a total of 60 days) on payment of additional fees, and beyond that a further 60 days (a total of 120 days) on payment of ad valorem fees. After 120 days, condonation is no longer available and the charge cannot be registered at all.

Where the company fails to register, Section 78 lets the charge-holder (the bank) apply for registration itself and recover the fee from the company — a safety valve every lender should use rather than rely on the borrower. On registration, the ROC issues a certificate of registration in Form CHG-2, which is conclusive evidence that the charge was properly recorded. The comparison of these timelines with charges created under SARFAESI is a common trap, so study them side by side. If you want the full corporate-law angle, our sibling guide on the Companies Act 2013 for bankers covers charges, borrowing powers and CSR in depth.

🏛️ CERSAI, Satisfaction and Priority of Charges

Company-law registration with the ROC is only one register. Under the SARFAESI Act, every secured creditor must also record its security interest with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), generally within 30 days of creation. Section 26E of SARFAESI gives a registered secured creditor priority over all other debts and government dues — making CERSAI filing decisive for who gets paid first. A bank that mortgages a property but forgets to file with CERSAI can lose priority to a later lender who did file.

When the borrower repays, the charge must be released. Section 82 requires the company to intimate satisfaction of a charge to the ROC within 30 days (extendable to 300 days with additional fees), after which the Registrar records satisfaction. Failure to report satisfaction leaves a "phantom" charge on the register that can block the customer's future borrowing.

The table below sets out the key registers and timelines side by side.

🧠 Remember: ROC registration applies only to companies. CERSAI applies to security interests created by any borrower — individuals, firms and companies alike — which is why banks file both for corporate loans.

These recovery and priority rules connect to how banks value and provision for stressed security, a theme you can extend through our cross-subject guide on Ind AS 36 impairment of assets. For enforcement mechanics, pair this with the Debt Recovery Tribunal process for banks and the compliance angle in KYC and AML norms for banks. You can find every related note under the Banking Regulations and Business Laws tag hub.

🧠 Practice MCQs: Creation and Registration of Charges

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❓ Frequently Asked Questions

Authoritative reference: see the latest guidelines on the Reserve Bank of India website and the IIBF syllabus portal.

Charges sit at the heart of secured lending, so lock this topic down before exam day. Reinforce it with full-length mocks and structured revision on the CAIIB course, and test yourself with unlimited practice on iibf.store mock tests to walk into BRBL with confidence.