Use of land as collateral: Do Land Records comprehensively reflect this information?
Source: Shutterstock For an emerging economy like India, access to finance is critical for economic growth. According to the recently conducted NABARD All India Rural Financial Inclusion Survey (NAFIS) in 2016-17, overall incidence of indebtedness in the surveyed households is 47.4 per cent and average outstanding debt per indebted household is Rs 91,407. Around 32.7 per cent of the respondents in NAFIS survey reported that they resort to borrowing in the wake of crisis/emergency situations. From lenders’ perspective, role of collateral is quite critical and land is one of the most commonly used collaterals. Rajeev et al. (2011) brought out the role of land as a security for accessing credit through formal (institutional) sources – 59 per cent of formal loans were given against land as security. Narayan and Chakraborty (2019) used the AIDIS data to calculate the proportion of institutional credit with mortgage of immovable property. The authors observe that within agriculture, the pe