In India, ambiguous titles of land as a huge hurdle when it comes to the nation’s development. Unclear titles lead to litigation of the land, underuse of the capital, and even home loan fraud. To check for this problem, the government wishes to introduce a dematerialized registry for all the titles of land. In layperson’s terms, this means having a demat account for land ownership.
How would a Demat account for land work?
Back in 1996, a national depository was set up by the nation to make sure that India made its appeal to foreign institutional investors, as the government grew weary of the mounds of paper floating about. About ten years later, the value of the securities that are currently held in electronic form has crossed India’s gross domestic product. The ill-timed delivery of shares is a relic of the past.
This is where owning a demat account for land use comes. India’s government wishes to replicate the feat that the national depository accomplished on a much wider scale for the entirety of the nation. This is why India’s state governments have taken the initiative in capturing the electronic form records of any kind of ownership of land. This electronic record is akin to the dematerialization of securities.
Purpose of a Demat account for Land
Lenders across India are ready to join hands with the Indian government so they can collectively promote a central registry of equitable home loan mortgages, as a means of preventing home loan fraud. If this venture takes off, mortgage finance firms and banks will be able to run checks on the registry and decide whether or not the title deed is clear. They will aim to ensure the title deed is not offered as collateral to another lender or registered in the name of any other entity.
The government’s goal is that having a central registry system would aid in checking home loan frauds. However, this is far from adequate. State guaranteed land titles that are clean still remain to be a challenge. Although these land titles would still have a multiplier impact on limiting the limitation across India, in addition to improving revenue, the productivity of capital, and governance.
Challenges of having a Demat account for Land
The challenge now lies in making sure that the holders of that immovable property are guaranteed their title. This has proved so challenging that certain nearby nations like Sri Lanka and Thailand have attempted to implement this policy and have not been quite successful at it. Similar to India, these nations have had their land ownership vested for centuries with individuals and not with the government itself. The government owns land in countries like the UK, and Australia. In such countries, the Torrens system prevails.
This brings us to what the Torrens system is. It is a system where instead of posting ownership of land via registering deeds, this ownership is directly issued to an individual by their state. The system gets its name after the premier of South Australia who first introduced this system back in 1858. The goal of introducing this system was to end any uncertainty about who had ownership of a piece of land.
One proposal is that the central government should take the lead in creating the infrastructure in the form of a central depository or registry so it can keep track of all the electronic records of millions of property and land deeds. In electronic form, these land deeds can be conveniently accessed by all States. The challenge for States would be to harness any administrative power to ensure the title verification process is leak proof.
Is owning a Demat account for land India’s Future?
As a case study within India, the state of Rajasthan attempted to address this issue by trying to modernize its legal and administrative infrastructure. Rajasthan’s goal was the administer the building blocks that create a central database for the State’s landholdings, tax data, ownership, and all transactions relating to its properties. The property records’ details were completely digitalized and the goal was the carry out a verification of these records to confirm the request for dematerialization.
The final step would be to publish any title details with the goal of resolving any disputes. It was then proposed by the state to guarantee the property title three entire years after the Demat request to ensure there were no disputes. Currently, this proposal has been consigned to the chiller, due to a change in governance.