Demat account for land: All you need to know
In India, unclear land titles are a significant roadblock to the country's progress. Uncertain titles lead to land disputes, capital underutilization, and even mortgage fraud. To address this issue, the government plans to establish a dematerialized register for all land titles. It translates to making a demat account for land possession in layman's words
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How would a Demat account for land work?
The government established a national depository in 1996 to ensure that India appealed to international institutional investors, as the government had grown tired of the mounds of paper floating around. After ten years, the valuation of shares holding in electronic form has surpassed India'sIndia's gross domestic product value. The delivery of shares at an inopportune moment is a thing of the past.
It is where having a land use demat account comes in handy. The Indian government wants to recreate the national depository's success on a much larger scale for the whole country. This is why state governments in India have taken the lead in collecting electronic records of all land ownership types. The dematerialization of shares is analogous to this electronic archive.
Purpose of a Demat account for Land
Lenders across India are willing to work along with the Indian government to promote a central register of equitable home loan mortgages to combat home loan fraud. If this venture succeeds, mortgage lending companies and banks will search the register and see if the title deed is clear. They'llThey'll make sure the title deed isn't used as collateral by some loan or registered in someone else's name.
The government hopes that it would be easier to detect home loan fraud by establishing a single registration scheme. It, though, is far from sufficient. Clean state-guaranteed land titles are also challenging to come by. In addition to improving revenue, resource productivity, and governance, these land titles will have a multiplier effect on limiting the restriction across India.
Challenges of having a Demat account for Land
The task now is to ensure that the immovable property owners have a clear claim to their property. It has proven to be so tricky that neighboring countries such as Sri Lanka and Thailand have tried but failed to enforce this strategy. These countries, including India, have had their land ownership vested in people rather than the government for decades. The government regulates property in countries such as the United Kingdom and Australia. In these countries, the Torrens scheme is the most common.
It takes us to the Torrens system concept. It is a scheme in which, rather than recording deeds to show property possession, the state directly issues ownership to a person. After South Australia'sAustralia's premier, this scheme was named after South Australia premier, who was the first to implement it in 1858. The aim of implementing this scheme was to eliminate all doubt over who owned a piece of property.
One suggestion is that the federal government lead the way in developing facilities, such as a central depository or register, to keep track of millions of electronic documents of property and land deeds. Both states can easily view these land deeds now that they are available in electronic format. The challenge for states will be to use whatever regulatory authority they have to ensure that the title authentication process is impenetrable.
Is owning a Demat account for Land India'sIndia's Future?
As a case study within India, Rajasthan sought to resolve this problem by modernizing its legal and administrative infrastructure. Rajasthan aimed to manage the components that create a single database for the state's landholdings, tax records, possession, and all property transactions. The property documents' specifics were fully digitalized, and the intention was to verify these records to validate the proposal for dematerialization.
The final move will be to disclose some title information to settle any disagreements. The state then proposed that the land title be guaranteed three years after the Demat request to ensure no conflicts. Because of a transition in governance, this plan has been put on hold for the time being.