Property Registration and Trade in India - Reforms for Better Governance

Property laws in India are comparable to many developed countries with some flexibility for community specific needs. A Government agency, usually a Registrar Office, acts as an intermediary for property registration and transfer of rights.

While Property registration process has evolved over recent years, especially with digitization of property registration process in many states, implementation of these laws have left a lot to be desired.

The biggest challenge in property registration is the valuation of the property itself. Currently, this is governed with a set of boundary policies like guideline value for a location. However, these policies usually lag the market significantly both in terms of time to effect and valuation itself. Quite often they are not efficient market indicators.

Grey economy in Property market

The gap in property valuation allows a serious misappropriation which result in huge revenue loss to the government. In addition, this also generates black money that fuels grey economy.

A person selling property misusing these laws would accumulate black money and it can only be used against another such transaction that requires it. We can imagine how this has led to a huge grey market economy in India. We also know that this grey market is both inefficient in use of resources and also harmful to the society. It is inefficient because the money, when not deployed, usually stays in the form of cash which has least efficient economic utility. It is harmful since this cash may be deployed in socially unacceptable opportunities.

Reforms to address gaps in governance

The main issue in property regulations is RIGHT valuation of the property. This will not only generate more income to the government, but also decreases the motives for grey market transactions.

Immediate question that arise is ‘can valuations be market driven as in stocks?’ Stock market regulations have evolved significantly and there is little, if not none, doubt about valuation of a stock.

This begs the question. Can we solve property valuation issue by making property an instrument similar to a stock?

While idea of making property similar to a stock is noble, at least for now, it is farfetched. However, we can take strings from stock market governance and apply the same to property market. One such thought is presented here.

Financial Intermediary as a property regulator

We introduce the concept of intermediary for a property. All properties must be associated with an intermediary. This is similar to demat account for stocks.

According to the new process:

(a) A property is always associated with an intermediary. It can be banks or such financial institutions that have the expertise to valuate properties. For example, banks those offer property loans.

(b) Transaction begins with Seller (who is also the current owner or an entity authorized by the owner) initiating the process. Seller has to intimate the intermediary about the possible deal along with requisite details like buyer identity, sale price, etc.

(c) Intermediary would then apply a fair valuation on the property. In this process, intermediary attempts to define a fair market value for the property based on current market conditions.

(d) If the fair value significantly differs from the deal value, intermediary informs the seller of the same and requests authorization with reasons.

(e) Seller may discard the transaction if fair price is significantly above deal price. Seller may also choose to go ahead with the deal in spite of difference in value by providing reasons for the same.

(f) Seller can choose to go ahead with the transaction by surrendering original titles to intermediary along with payment of transaction fees.

(g) Intermediary would then process the change at their end and also inform the government agencies about old title and buyer information.

(h) The government agency would then send new title records to the intermediary.

(i) Intermediary sends the title to the new buyer after collecting transaction fees.

(j) Transaction fees are periodically deposited to the government agencies by the intermediary after deducting their share in these transactions.

Market value is governed by many factors and it is understood that the actual transactional value might depend on these and many others that influence it. In any case, this process change will significantly reduce misuse of property valuations.

One important assumption in this approach is that the financial intermediary will be honest in identifying fair market value and hence act as a guard against misuse. It can also be noted that it is relatively easy to enforce strict laws of compliance against an institution than an individual.

Further reforms can be evolved over a period. For example, we could restrict transactions that significantly differ in valuation. This can be achieved by allowing seller to borrow money on the property instead of selling for lower price. Alternately, intermediary can auction the property to fetch a better market price. However, property rights laws will need amendments to allow such possibilities.

Additional benefits of suggested approach

Apart from the valuation itself, there are other benefits from this process:

(a) Every property is associated with an intermediary. The same intermediary would continue for the life time of the property or till such a time the intermediary chose to transfer accounts to another intermediary. This ensures better accountability.

(b) Because intermediaries are competent with knowledge of the market, tax collections can be automated. For example, intermediary pays tax on time to the government by debiting the property account which is then settled by the owner with a payment. This is similar to a normal utility credit transaction.

(c) Revenue collection on properties can be streamlined with innovative reforms. For example, property tax collected can follow a standard indexation (to account for inflation) for five years followed by a market valuation. Another option would be to apply a percentage on current market value.

(d) Data accuracy of ownership enables fair distribution of social expenses to each property. This can be assigned as a variable cost to a property – just like utility bills – which is then collected as part of regular tax cycle. For example, maintenance cost of local parks can be distributed in proportion to property owned in that location.

(e) Over a period of time, this system can evolve as property stocks that can also be traded online thereby discovering true market price for every transaction.

(f) Existing properties and ownership would be identified and recorded by the intermediary. This establishes a clear asset ownership data that helps in reduction of property ownership disputes.

(g) Financial Intermediary can extend loans and other such credits against the property account. For example, taxes and other debits can be accumulated against the property and collected annually. If owner wishes to do so, these debits can be carried as mortgage loans for an extended period. This reduces overhead of continues cash flow requirements for the owner apart from reducing the number of such transactions.

Challenges in implementation of suggested approach

There are few challenges in the implementation of proposed approach.

(a) First and foremost in the cost of intermediary itself. Since this change is expected to increase government revenue substantially, intermediaries can be compensated from the government revenues.

(b) Processing time may increase due to additional layer. However, this can be addressed by aligning additional incentives for speedy processing.

(c) Resistance to change from government agencies might be a huge challenge to deal with. This has to be addressed by arranging public knowledge sessions to highlight the benefit of this change to the entire society.

(d) Disagreement on property valuation between intermediary and seller can obscure the data collected. However, aligning intermediary benefits to accuracy of this data can help reduce such calls.

(e) Intermediary has to maintain and process transactions for many sellers and buyers. This imposes additional data maintenance burden on the intermediary. However, this can evolve into a repository of one or two regulators (like BSE / NSE) thereby reducing the associated cost. One such option is to just use PAN numbers for identity of sellers and buyers.

(f) Digitizing existing records is a huge challenge. Existing data is very huge. Initial stages of data upload and subsequent maintenance will have few challenges. In addition to this, some of these records may be in various local languages and hence requires additional effort to translate, store images of original documents, etc.

(g) Property transfers for reasons other than an outright sale, such as inherited property, is complex and involves legal overheads. Role of intermediary in such cases should be clearly defined. For example, when property ownership is under dispute, property can be put on a hold status and intermediary takes responsibility of maintaining financial health of the property (like payment of taxes, etc.) till a clear ownership is established by a legal entity.

Applying For A Credit Card - A Quick Glimpse Into The Formalities Involved

Today’s world revolves on the hinges of the “superfast” - ultrasonic jets, speedy vehicles, flyovers, expressways… the economy booming all around. So is the world of money doing the fast lanes… small little plastic cards able to accomplish a host of purchases and transactions the world over. People are literally crazy about owning these little plastic cards. These cards called credit cards are the entrants to the financial portals. Banks are overflowing with applications from people from all walks of life, young and old, educated as well as peasants, rich as well as the not-so-rich, the businessman, the professionals, bankers, as well as students, eager to own the magic plastic card. Now the currency notes and the hard cash changing hands are being replaced by the credit cards everywhere. People prefer the convenience of credit cards instead of wallets overflowing with dollar bills. But before we become accustomed to the modern wonder, it is prudent to spare a thought to the responsibility that goes with it. One should be aware of the several “do’s” and “don’ts” that are an integral part of the protection the federal law offers you. Be very careful while filling up your details in that hurried application for credit card. A lot of effort, time and expense goes into verifying every little detail about the applicant vis-a-vis the identity. Such applications have become quite tedious in the United States as the US Patriotic Act requires further verification of the applicant for a host of utilities including credit card. But nobody in the US seems to mind the tedious formalities associated with the issue of the credit cards as credit cards have become a necessity rather than a luxury these days.

Every average American today uses scores of credit cards at least once every day. This is the state of the middle class only so you can just imagine the number of credit card applications the banks and the verifying authorities are flooded with every day. As of date, about ten million application for credit cards are getting processed a day. This number is sure to go on increasing day by day with credit and debit cards becoming a way of life. It has become a very pressing need of the day to educate people on the prudent use of the credit cards so that they do not throw away their hard-earned money on wasteful and meaningless expenses that benefit no one or at best, only a few . So when you get down to write out that application for obtaining the credit card, remember that you are changing over to life’s fast track and reforming your purchasing power.

You will be surprised to be asked by the statesto whom your application has been forwarded, to fill out another form or acceptance form even though you have filled in the details in the original application. This is a way of ensuring and verifying that the applicant making the application and the person receiving the credit card is one and the same. The credit card bank or the credit card company issuing the credit card needs to verify that they are sending the card to the correct person who has made the application originally. These days online application forms and online verification is available to simplify the process. One needs to be aware of implications of the replies he gives over and above the mandatory name, address and contact numbers as well as the hidden charges that could prove costly in the long run.

[Engsub] All for TVXQ. once in a life time.

- Credit: Yi Mao Production TVXQ Baidu - I wanna say a big big thank to Yi Mao Production, the lovely ones who made this awesome vid :D srl they must put a lot of effort and love into making this vid and i really adore their work!! =) (I’ve juz changed the credit a bit coz Yi Mao is actually not the name of juz one person, but the TEAM NAME of those who made this vid, YI MAO PRODUCTION, they’re fr Mr.TVXQ and other Chinese fansites, so basically it’s a vid by Chinese fans, and was shared …

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I have been in a debt management program with a local credit counseling service for about 8 months. My parents have offered to co-sign a loan so I can pay off the cards. The loan with the bank is a lower interest rate than the cards and will pay them off faster with a lower payment each month. Should I pay the cards directly or go through the credit counseling service? Which is better for my credit score?

Consumer-friendly Credit Card Reforms

card companies have come under fire for unfair practices that almost force unwary consumers into default or bankruptcy.

The Feds have taken notice, and new rules are in the offing. The bad news is that the new rules are slated to take effect in July 2010. The good news is that in response to consumer outcry, that date may well be moved up.

What’s going to change?

Credit card companies will no longer be able to raise interest rates on balances you already owe, unless your payment is 30 days late. And, they’ll be required to give you notice that they’re going to raise those rates instead of handing it to you as a surprise on your monthly statement.

They’ll also be required to mail those statements in plenty of time for you to receive them and mail back your payment before the due date.

After the rules take effect, when you send a payment that’s more than the minimum, your credit card issuer will be required to apply that excess to the balance carrying the highest rate of interest. At present, they apply it to the lowest.

The current practice of “double-billing,” which goes virtually unnoticed by most consumers because it isn’t calculated out on the statement, will come to an end. This is the tactic in which the card issuer calculates the interest based on the average daily balance for both the current and the previous billing cycle. Thus, you might have made a $1,000 payment last month, but that $1,000 of debt will still be factored in to the interest on your current statement.

We’ll be watching for notice that the new rules have gone into effect. In the meantime, consumers need to keep a close watch on their credit card statements and any “junk mail” coming from their card issuers.

These mailings could give notice of changes in your terms that will have a profound effect on your credit score, as well as your access to credit.

Some card issuers, in an effort to lend less, are cutting card limits down to the amount currently owed. Consumers who have an automatic billing to their accounts are suddenly seeing bills that reflect an over-limit fee when they thought they had a safe cushion.

Do set up internet access to your accounts - and do check your credit limit before setting out to make a major purchase with your card. Your credit scores are at stake!

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The New England Patriots official team logo can now be featured on the NFL Extra Points™ Platinum Plus® Visa® Credit Card from Bank of America. (www.patriotscreditcard.com). This rewards credit card has proven to be a touchdown with fans and is scoring rave reviews in the rewards credit card industry. Like many universities, airlines, and retail stores have done for years, NFL football teams like the New England Patriots are now being displayed on consumer credit cards. These football oriented credit cards are rapidly growing in popularity and are proving to be a hit with sports fans across the country.

The NFL Extra Points™ Platinum Plus® Visa®™ Credit Card from Bank of America has valuable features, including:

• A $50 NFLshop.com gift card after your first qualifying transaction(s) using your NFL Extra Points™ Visa® Credit Card.

• No Annual Fee.

• Earn 1 Point for every dollar you spend in net retail purchases. Points are redeemable for NFL merchandise, tickets, and VIP passes to NFL experiences.

• 0% Introductory Annual Percentage Rate (APR) on balance transfers and cash advance checks for your first 12 billing cycles.

• 100% fraud protection

• Online account access and Points management.

At a time when everyone’s nerves are frayed because of uncertainty in the stock market, illiquidity in the credit market and the softening real estate market, one thing remains constant – sports fans love NFL football. Historically, football has given the public something to believe in and something to hope for, particularly in tough economic times. With the NFL Extra Points™ Platinum Plus® Visa®™ credit card, Patriots fans can be reminded of their favorite team every time they take out their wallets. Real fans carry the card with pride. Visit www.patriotscreditcard.com to complete the credit card application online in a few short minutes.

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