Page 48 - Banking Finance July 2022

ARTICLE

consideration of value of the assets. Another attribute of As per this survey, 31.2 % of all rural households and 22.4%
land as a collateral is as Binswanger (1986) calls it as of all urban households were in debt. As for collateral,
appropriability-the ability to liquidate collateral with minimal surprisingly, the same survey informs, just about 3% of total
loss to lenders. loans in rural households and 4.7% loans in urban households
used landed property as collaterals. In contrast, even in rural
Formal institutional lenders ,such as banks provide a variety areas, assets such as Gold and Jewellary are being
of loans against land and building. Agricultural production and increasingly used more often than land for accessing credit.
investment loans are provided against the security of rural
lands. Personal loans against property for various personal
So what is plaguing Indian land Markets ?
purposes-marriage, travel and tourism, health ,education are
The Indian Land market is currently in a state of distortion
another example. As per NSSO 70th round figures (All India
due to a variety of factors such as :
Debt and Investment survey), as shown in Fig.1, Land and
1. Socio Economic Barriers : Specially in rural areas, land
Building together accounted for about 90% of the total value
is seen as an emotional asset for the household whose use
of assets at the national level for indebted households in both
is invoked only as a last resort. This increases the likelihood
rural and urban areas. It can be argued that over time land
of the farmer falling to various non-institutional players like
has emerged as an assured and 'bank' able asset relied equally
moneylenders as banks in general insist on keeping some
upon by both borrower and the lender.
form of collateral.
2. Heterogenity : The Indian
land market is a sum-total of
smaller sub-markets operating
at state and UT levels ,which
are highly fragmented and
unorganised. The Quality of
land records also varies from
state to state and from type-
to-type of the land .For
instance, land records may be
different for personal land-
holdings, for common land
(Government or village lands)
and also for lands that have
been given away as a result of
various land-distribution
movements.

3. Quality of Land Records :
Multifarious government
agencies are responsible for
the upkeep of records related
to land. For Ex-the Revenue
deptt, the Survey Deptt.,
Registration Deptt all keep
records related to various
aspects of land-location,
physical characteristics of land,
incidence of tax, et all.
Fig1
Unfortunately most of these

48 | 2022 | JULY | BANKING FINANCE