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Akshadharan P R S (Advocate)     10 September 2008

Mortgage of Agricultural Land

Want to know, Is there any law which prohbits the mortgage of Agricultural Land in Kerala ?

If no, whether any permission is needed from the revenue / other authority ?


 13 Replies

Prakash Yedhula (Lawyer)     13 September 2008

 I dont think there can be any prohibition for creating a mortgage of agricultural lands. Nor any permission need to necessary.

Suresh CSLLM (Service)     31 December 2009

agriculture land is state subject. there are some some state that prohibits mortgage over agriculture land.




Practically; many a time when approached to the bankers; they don't accept agricultural lands as security.

TVD Rajkumar (Advocate)     29 January 2010

Practically; many a time when approached to the bankers; they don't accept agricultural lands as security."

Mr. Surendra, the reasons could be many. One could be that you cannot proceed against such properties under SARFAESI Act

Parthasarathi Loganathan (Advocate)     02 February 2010

Banks never discourage Agriculture lands as security.  Though the same is excluded from the purview of SARFAESI Act for possession by the lender in case of default, there is statutory obligation on the part of nationalised banks to accept them as Prime as Collateral security to comply by the Priority Sector norms fixed.  No state can exclude Agricultural lands as security.

nishad (Asst.Manager Legal)     08 February 2010

there are states like karnatak which prohibits mortgage of agri land for any other purposes other than agri purposes....

Parthasarathi Loganathan (Advocate)     09 February 2010

Of course Agricultural lands are accepted as Security only for loans granted for Agricultural activities as per Priority Sector Advances norms.

Satish (Director)     18 May 2011

Can the banks sell the Agricultural Properties under SARFASI or any other means from a Borrower on his Account become NPA on 31.03.2011. What is the  procedure for recovery once the account become NPA





RAJU O.F., (Advocate)     22 May 2011

Banks/FI can not sell secured agricultural properties directly, under the SARFAESI Act.  But such properties can be sold by filing suits in civil courts or DRT


what is the law in state opf Assam being related to the equitable mortgage of Agricutural land. Can the mortgagagee be sued in case of defaulter of payment in respect of such equitable mortgage of agricultural land and the bank lender concerned aquire the possession of the same.under CPC or SARFAECI

Sandeep (GM Fin)     17 February 2012

hi, Mr. Parthasarathi Loganathan

can i get ur no. i have urgent issue on this topic

JB Padhi (Sr. Engineer)     29 October 2012

Agree with Parthasarathi Loganathan; no bank can refuse loan to farmer for their financial needs. The Central Govt is very strict on this.  It must be noted that the farmers secure loan by mortgaging part of their land holding for various purpose like procuring farm implements, construction of irrigation system including borewell with power switching gear.. However, there is a loan which can't really be classified under "agriculture" loan (in toto) for tractors, trailers, van / mini truck (for delivery of milk, poultry, fruits and vegetables, etc) but at the same time the bank can't tell the farmer not to use the same for commercial purpose. The farmers holding substantial land manage to secure loan for "improving their housing" which we call farm house, etc.

The important thing is that the farmer applies for loan and the bank obliges without asking too many questions which would be irrelevant from farmer's point of view. Mixed farming involves dairy, poultry, pisciculture, growing fruit bearing trees and there are many things like fan, air conditioning, lighting, electrical pumps, GI pipes, water storage tanks are required for dairy; GI pipes, CFL lights, tarpauline.. are required for poultry; cold storage is required for storing fruits but are very costly - often the big land holders use part of the loan for construction of their house in nearby town (not agri) knowing well that they will receive Govt subsidy for their stated constructions. Govt wrote off o/s loan of farmers some time ago and that benefited those farmer who had taken substantial loan (25L - 50L) in Dec/Jan which was just 2 month prior to Govt announcing waiver. The small farmers (95% or more) had o/s loan of 1000-10,000/-

The thing is banks are under pressure to disburse agri loan... they have a target. They have to meet the target and if they are falling short they go to farmers and tell them to avail benefits..  hardly care what the farmer does with the money..  even if that means buying a motorcycle, TV or an a/c.. The "good intention" is assumed because the farmers are actually in debt most of the time unless his / her son is working with an MNC...  fact is the benefits are offered to farmers and most don't know how to avail the same.

Now the first question - loan by mortgaging agri land .... for purchase of real estate. That is happening no doubt but there are hardly any farmer who do that. They buy agri land to augment their earning. There is a racket In Cities like Mumbai where people manage to get "Govt approved farmer" ID (!!) without any land holding.. even if that is criminal I have not seen any action. Mr. Longanathan can throw more light on this.

Krishnan Iyer (Law Officer)     11 March 2013

HI, can a NBFC mortgage agricultural land for the purpose of financing in Maharashtra?? if yes under what provision?? if No under what provision??


Thanks in advance

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