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One of the important steps to be taken by Reserve Bank and Public Debt, Public Expenditure and Public Revenue (Taxation) is to revamp the collateral valuations and all the collaterals given in the Banking system.

This article is intended to help World Bank, IMF, Asian Development Bank, European, American and other Central Banks, Reserve Bank, Commercial Banks, Non-Banking Finance Companies, Residuary Non-Banking Finance entities, Private money lenders and Bank authorized Valuers.

State Governments value of our land for Revenue records and charge stamp duty and Registration charges.  They are not aware of the end use.

Whereas in Reserve Bank and in Central Government they know the end use of land.

Collaterals valuation by Reserve Bank by taking the present methodology of valuation needs to be revamped.  The valuation report for land as per the State Government valuation needs thorough scrutiny and this is the origin point of cross collateralization within the country.  This can be extended to external entities also.  Why we say this is if a one acre plot in Malabar Hill which can fetch three FSI is valued at Rs. 600 crores, the person giving the collateral can pursue the banks and get 300 to 400 crores credit facility.  Whereas for the same three FSI plot in say for example in Siva ganga in Tamil Nadu is valued at Rs. 2 crores will get only 1 crore as credit facility. The person getting 500 crores credit facility with 1 acre land will be able to buy a  plantation estate  of 500 acres in Shimoga, or Darjeeling or Kothagiri.  This anomaly has to be checked. The landed gets FSI, what does a landless get .  Also the same land value for same FSI can be done only by reservations and through land compensation bond and check this inequality and creation of NPAs at the root itself.  Similarly if a 500 kms bullet train project  is 1 lakh  crores, for every 1 km we will be spending 200 crores and 1 metre 20 lakhs, For this 1 m what will be the land cost. Similarly in national highways for 1 km we are spending 50 crores and 1 m costs 5 lakhs and how much will be the land cost in it.  Summing up be it in housing or infra land cost needs to be checked.

Readers are requested to learn from Milton FRIEDMAN, Marcia Stegham, Professor Brahmananda’s  SEMI BOMBLA  and tobin Q ratios, you will find  the answers for does money matters or does not matter or money is what money does. All the three can be efficiently handled and answered  by monitory policy committee and finance, revenue, expenditure secretaries. Sovereign guarantees issued by central government has to be totally relooked on these lines. Interest rate policies have to be formed and redemption yield curves has to be finalized and land compensation bonds must align to this basics structure and accordingly budget should be formulated.

One Nation One Housing Policy – Collaterals Vs Guarantees Vs Margin Vs Interest Rates

If we say 15 trillion worth of RERA RBI house with housing loans should be given as coupons we mean we are creating 75 trillion dollar worth of insurable interest for our great nation.  This is the basic philosophy for One nation one housing policy.

We request reserve Bank to review all the collaterals in the banking system and also ask the valuers to do valuation based on land compensation bonds, wherever FSI is known.  All the borrowers have to bring either more cash margins or bring more land as collaterals and or go to public issues and we recommend convertible cumulative preference shares or secured debentures or unsecured debentures either convertible or non-convertible.

Reserve bank should be in a position to absorb any shock and those who avail credit must be given time to adjust the new capital adequacy norms to get continued credit supply from Reserve Banks through their bankers.

One more reason why we are writing this article is please assume the following. Suppose if we say 1 lakh housing projects are ongoing with RERA in 1 acre plots and if the average cost of sale is Rs. 5500 per sq.ft. and the construction cost at Rs.2500 per sq.ft.,   Rs. 3000 per sq. ft. Will go to land which amounts to 30 lakh crores from the banking system will go to land owners and construction companies as land  monetization. Our agriculture credit is only 19 lakh crores whereas on going land monetization is 30 lakh  crores.  This kind of credit delivery has to be pruned at any cost.  Housing or Infra, land monetization needs to be cross checked at the planning stage itself. We recommend like SEBI vetting prospectus in stock market, RERA RBI should vet each and every project for insurable interest, securitization etc. through RERA RBI house with housing land  coupons  as suggested by us.

To sum up we sincerely request to adopt the theme for the coming budget as one  nation one housing policy and mentioned as basic needs in economic survey and try to use chief shelter commissioner, controller of land compensation bonds, ministry of co-operation , ministry of social welfare, RERA, RBI, unified supreme housing authorities state wise and come with clear synchronized fiscal and monitory frame work.  We also request limited purpose construction banks, construction and materials, weekly payment gateway, exclusive construction factoring services banks to conduct weekly payment by receiving funds from construction factors. These construction factors are receiving money from
Reserve Banks in tranches as per the construction agreement project wise.

We thank Dr. Kalaignar KARUNANIDHI’s SAMATHUVAPURAM HOUSING concept, Maharashtra Government HOUSING POLICY OF AFFORDABLE HOUSING BUY BACKS, Telangana Governments DHARANI PORTAL AND 2 BHK SCHEME, present Prime Minister’s affordable housing scheme, Madam INDIRA GANDHI’S, ROTI, KAPPADA, MAKHAN and GHARIBI GHATAO, and OPS-EPS’s Governments of Tamil Nadu affordable housing policy no. 61, of 2020, vetted by World Bank and ADB which talks about issue of coupons / vouchers.  We also thank Madam LEELANI FARAH, former United Nation special rapporteur on Housing who always maintain housing as a right and to present UN special rapporteur BALAKRISHNAN RAJAGOPALAN for stating spatial segregation. Our scheme is called SPATIALLY SEGREGGATED SHELTERABLE  SPACE CREATION AND ABSORPTION IN AFFORDABLE AND ADEQUATE MANNER TO BENEFIT ONE AND ALL AS FUNDAMENTAL RIGHT (MEASURED IN FSI.)


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June 2024