Govt to seek approval from Cabinet to set up a land bank company

DIPAM finalises structure of the company that will sell land parcels of govt departments and PSUs

The government will soon move a cabinet note to set up a land bank company that will take over land parcels of public sector undertakings.
 
The Department of Investment and Public Asset Management (DIPAM) has finalised the structure of the company that will be tasked with selling land parcels —including those stuck in litigation —owned by government departments and public sector companies.
 
“Structuring has been finalised, and some fine-tuning is needed before sending the proposal to the cabinet,” said a top government official.
 
Soon, the proposal will be placed before the Cabinet Committee on Economic Affairs for its approval, he added.
 
The government is looking to replicate the model of Canada Lands Company, which is a federal government entity that can dispose of and monetise the surplus land of government departments and at the same time specialise in real estate and managing assets such as tourist destinations, Business Standard had earlier reported.
 
Taking a cue from the Canadian model and others globally, the land special purpose vehicle (SPV) will be set up as a company, and is likely to take over land parcels of public sector undertakings. The company will then sell land parcels to investors through attractive and specialised arrangements. It is expected to develop them into revenue-generating projects by turning around idle assets of government departments and public sector undertakings.

 
The government is also looking at utilising better land parcels of public sector undertakings, and is considering converting them into revenue-generating and financially viable projects through the new entity. The thinking behind this is to create more value from such idle assets rather than disposing them of at low valuations, the official added. The entity may develop the land assets into software technology, or IT parks and special economic zones (SEZs).
 
The SPV will house experts to resolve disputes that have hampered sales of such properties. The public sector hasn’t been able to sell land assets due to litigation and lease terms.
 
“The Finance Bill has created an enabling environment for the land SPV as it has exempted the imposition of stamp duty on transfer of immovable property by one government-owned company to another,” the official quoted above said.
 
The amendments to the Finance Bill said: “Transfer of a business or asset or right in any immovable property from a government company, its subsidiary, unit or joint venture, by way of strategic sale or disinvestment or demerger or any other scheme of arrangement, to another government company or to the central government or any state government, after the approval of the central government, shall not be liable to (stamp) duty.”
 
In the Budget Speech, Union Finance Minister Nirmala Sitharaman had proposed incorporating an SPV to monetise surplus land with government departments and public sector units.
 
“Monetising of land can either be by way of direct sale or concession or by similar means,” Sitharaman had said.