Page 50 - Banking Finance July 2022

ARTICLE

data-both current and historical. Such data could include escalates the cost of property transactions leading people to
standardized geo-spatial information alongwith independent avoid registration. Many such transactions like heirship
valuations. This is offcourse similar to existing CERSAI partitions etc. do not get registered. As a result the record
information except that it also contains valuation shows outdated data .Under the Jawaharlal Nehru National
information unlike CERSAI. This can be useful in the following
Urban Renewal Mission (JNURM), one of the targets was to
two ways:
rationalise stamp duty and bring it down to 5% by 2018. Some
a. Consistent information on changes in valuations that
states have followed suit and reduced their stamp duties for
lenders can use to MARK TO MARKET their collateral
ex -Delhi and Mumbai to 6% and 5% respectively. Similarly,
values
the Financial Sector Reforms Commission (FSRC) had
b. Provision of benchmark values (on valuations) especially recommended to amend Registration Act, 1908 and Indian
of land located in remote areas where lenders have no Stamp Act, 1899 to not require the payment of stamp duty
existing exposure to. for registration of certain property transactions. States should
reduce the stamp duties present levels of 15% to the level of
5. Easy access to governmental data : 3-5%. However, since stamp duty forms a large part of state
government's revenue the move must be with adequate
Electronic provision of all governmental data is already
planning and in a phased manner.
ongoing in many states with varying stages of completion
under various e-governance initiatives. However the cost of
Conclusion
digitizing humongous amounts of historical data is both time
consuming and cost-prohibitive. One quick solution could be While conclusive titling has been rightly pointed out as the
scanning existing governmental records and display them as solution to the land distortion problems, several systemic
steps need to be taken before this becomes operational in
images
India. These steps include amending laws across centre and
states, streamlining administrative changes at state level to
6. Land Ranking :
enable uniformity in collection and maintenance of land data
First a comprehensive database/portal of all available land
and ensuring constant updation and accessibility of land
parcels in the country should be prepared and the existing
data. India has made a limited use of unlocking and
valuation data available with banks/FIs should be collated
channelizing land value to finance urban infrastructure.
with it. The 'clean' land parcels may be ranked such that
Some cities and states have made a start. For ex -Mumbai
overtime there is an attribute-based ranks given to parcels
Metropolitan Regional Development Authority project of an
of land. It is a fact that borrowers trust lending institutions
alternate business district :the famed Bandra Kurla Complex.
for clean investigation of title and any deficiency, if existing,
Andhra Pradesh is another example of a state which has
to be unearthed by the bank. Over time, mortgaged property
taken number of steps to tap the gains in value from its
and properties that have been evaluated by lenders' credit
infrastructure development projects.
processes are likely to have a higher ranking. Maintenance
of a database of such clean properties enables these
References
properties to undergo a smoother, quicker and more confident
1. https://www.financialexpress.com/archive/unlocking-
process of scrutiny. This improves the overall credit cycle.
the-value-of-vacant-public-land/562550/
2. http://icrier.org/Urbanisation/pdf/
7. Governmental Reforms :
Ahluwalia%20and%20Mohanty_Unlocking_Land_%20Value.pdf
India is said to be having highest rates of stamp duty in the
3. https://www.prsindia.org/policy/discussion-papers/
world. The rates vary from state to state. During 2006-07 the
land-records-and-titles-india
stamp duty rates was between 12% to 15% while the same
4. https://www.livemint.com/news/india/why-indians-
in other countries stood between 1-4%. Further the stamp
don-t-use-land-as-collateral- 11573718470954.html
duty is calculated on the cost of property and in the event of
it being too high the stamp duty could also be prohibitive. In 5. https://realty.economictimes.indiatimes.com/realty-
addition, the registration fees is additional 0.5-2%. This check/monetizing-land-assets-for-government/1837

50 | 2022 | JULY | BANKING FINANCE