Page 47 - Banking Finance July 2022

ARTICLE

UNLOCKING THE LAND

MARKETS IN INDIA : A

STEP TOWARDS

BETTER CREDIT

CULTURE AND URBAN

INFRASTRUCTURE

Introduction countries, lenders prefer land as a collateral for the four
characteristics -Easy locatibility, Easy Identification, Easy
A constitution as voluminous as ours surprisingly refers to
Valuation and High Liquidity. Land, as per the Seventh
land only fleetingly. Spread over 395 articles in 22 parts and
schedule of the cosdtitution is pre dominantly a state
eight schedules, the subject of land comes up in only four
subject. The Indian land market, is therefore a series of state
parts .One of the important provisions was The Right to
land markets with varying levels of land administration rules,
Property, a fundamental right under Article 19 and Article
laws, revenue and usages.
31 of the Indian Constitution. This article guaranteed the
citizens right to acquire, hold and dispose of the property.
Land as a collateral in India
However this fundamental right was changed to a
constitutional right by the 44th constitutional amendment Traditionally in finance, land has been considered to be good
act, 1978. Property is an institution governing the control collateral for three main reasons-it is easily traceable and
over scarce resources in the hands of the individual. Citizens identifiable and cannot be easily siphoned off as easily as
have the right to own and possess the property and also to movables, it is easily reusable and unlike movables its value
put the property into use for credit dispensations. In most does not erode over time (at least in India). The
heterogeneous laws across states and the fragmented
nature of land markets in India has significantly increased
About the author the cost of collateralization-the cost incurred by borrowers
and lenders in the provision and acceptance of a collateral
Rishi Prakash and its subsequent liquidation upon default. Assets provided
Senior Manager (Faculty), as collateral have certain desirable characteristics. Banks
Union Bank of India,
prefer assets whose title and value are easily determinable,
Staff Training Centre Bhopal
while borrowers prefer assets where there is maximum

BANKING FINANCE | JULY | 2022 | 47