What is Land Development Bank?

Hey Friend,

Do you want to know, what is land development bank in India? Let me assist you with the same. Land Development Banks are distinctive financial institutions offering long-term loans. In 1920, the first LDB was launched in the city of Jhang, Punjab. However, the Land Mortgage Institutions Act, which gave these banks their true impetus in the 1930s (when LDBs were first known as Land Mortgage Banks), was passed.

LDBs were launched in various Indian states following the passage of this Act.

In 1989, the Agriculture Credit Review Committee (ACRC) emphasised the LDBs' expanded function and suggested incorporating the growth of agriculture and its related activities, such as reclaiming unused land and developing the non-farm sector.

The banks steadily widened their scope of offerings, and in 1982, at the NABARD's request, they started offering finance for agricultural and wasteland development. The important time for LDBs to adopt financing long-term loans for more major rural development activities, such as village and cottage enterprises, rural craftsmen, etc., was in the late 1980s and early 1990s. 

Additionally, in a few states, like Kerala, Karnataka, Uttar Pradesh, Maharashtra, West Bengal, etc., the banks provided finance for rural housing programmes through NHB refinancing. Due to the LDBs' enlarged responsibilities, they are now known as State Cooperative Agriculture and Rural Development Banks (SCARDBs).

The land development bank's primary goals are to advance agricultural development and boost agricultural output. The CLDBs either finance directly through their branches or give long-term financing to PLDBs linked with them.

These banks are organised in two tiers;

• District-level Primary Land Development Bank with taluka-level branches

• Bank for State Land Development. At the state level, all primary land development banks are federated into a central land development bank. There are certain states that have what is known as a "unitary organisation," where there is only one State Land Development Bank working at the state level, with branches and sub-branches operating at the district and lower levels.

These banks were initially set up to serve just one or a few taluks in the district. They currently qualify for one development block to be covered. Every landowner has the option to join and use their property as collateral to borrow money. The primary borrower is admitted as an "A" class member, while additional people who have an interest in the mortgaged property are admitted as "B" class members.

The PLDBs and a few individual promoters make up this group of CLDB members. Through the PLDBs and divisions of CLDBs, it provides long-term loans to farmers. It is doing this by selling floating debentures that are backed by the State Government. PLDB transfers the mortgage deeds it has obtained from the borrowers to the CLDB when it receives a loan from the latter. In exchange for the security of these properties, the CLDB issues debentures and raises money. Large sums are invested by NABARD and LIC in the debentures, and the former also offers LDBs help with refinancing.

I hope this answer clarifies your query about what is land development bank in India. I hope this helps:)

Read More: