Demand to simplify equitable mortgage deals

The State-level Bankers' Committee (SLBC) has suggested that the State Government reduce stamp duty and registration charges on ‘equitable mortgage transaction.'

Equitable mortgage means mortgage by deposit of title deeds and finds mention as such in the Transfer of Properties Act.

TOTAL INCIDENCE

The stamp duty applicable in the State is 1.50 per cent of the loan amount and, along with the registration charge two per cent, the total incidence makes for 3.50 per cent of the amount of loan without any upper limit.

The high stamp duty and registration charges and attendant burden on borrowers have forced banks in the State ignore what would otherwise have been a safer mode presented by ‘registered memorandum of equitable mortgage transaction.'

The SLBC has been discussing the agenda for getting the stamp duty reduced on the transaction to be followed up with a registered memorandum.

UPPER CEILINGS

Upper ceilings with respect to maximum stamp duty and maximum registration charges may also be fixed, irrespective of the loan amount, at Rs 5,000 and Rs 1,000 respectively as done in the neighbouring State of Tamil Nadu.

“If the charges for registered memorandum get reduced to the acceptable levels to all borrowers in the State, we would be able to make it binding on all equitable mortgages to register their memorandum,” the SLBC said.

“This would give more strength to the mortgages and raise the level of revenues accruing to the State Government.”

COMFORT LEVEL

The then Union Minister for Finance, Mr Pawan Kumar Bansal, who chaired an SLBC meeting in 2007, too had favoured this idea, saying this would raise the comfort level of both the bank and its customers.

He had gone on to suggest that the charges for registered memorandum for bank loans could be classified as a separate category and the charges for registration as well as stamp duty could be reduced for this category.

But the State Government has not yet taken a decision in the matter, according to the SLBC .