Amendment to Land Bill: Minister to bring in fresh safeguards to prevent mortgage of grant lands
Thousands of families, such as those in Mahaweli resettlement areas, received grant lands. Many have taken multiple loans from microfinance companies and cannot settle the capital or interest
The Lands Minister has vowed to introduce fresh changes to the n ew Land Development Ordinance (LDO) ( Amendment) Bill after he learned that a clause allowing rural families to mortgage grant lands without State oversight could lead to mass- scale dispossession, with properties everywhere being seized by financial institutions when their impoverished owners are unable to pay their dues.
S. M. Chandrasena told the Sunday Times he would not issue regulations to operationalise Clause 4 that enables the holder of land received through a State grant to mortgage it without the re s p e c t ive Divisional Secretary’s approval. He will also start the process of introducing an amendment to the contentious clause.
In a statement last week, 32 trade unions and community groups slammed the bill saying the “ignorance and indifference” of MPs regarding farmers’ indebtedness was “outrageous”. They pointed out that rural families-- who were the main recipients of grant lands-were already heavily impoverished and indebted and will mortgage their lands simply to get out of debt. They will then not be in a position to redeem the properties.
“…thousands of farmers who have lost their land to banks, finance companies and local ‘mudalalis’ know that the freedom to mortgage land has nothing to do with free will or liberation,” the statement said. “Farmers mortgage their lands and consequently lose their lands out of sheer desperation.”
The LDO was amended for the first time in 87 years. “MPs and Ministers did not raise these concerns or oppose it during the debate,” Mr Chandrasena said. “It was not challenged in court. The bill even went through without a vote. However, Minister Vasudeva Nanayakkara did highlight the matter and I will be taking his recommendation into consideration. I’m also a farmer and I understand the concerns.”
“Let us introduce one sentence to this law stating that, notwithstanding anything in any other law to the contrary, these lands will not be permitted to be sold at any auction by the morgatgee bank, Minister Nanayakkara recommended during the debate. This way, the right of a permit- holder to mortgage his or her property is also preserved. But unless that clause is included, farmers have no protection.
“When the bank asks how it can recover its dues, we need to give it an answer,” he continued. “Then we can say the Government will take over the lands as custodians and will repay the banks.” The Government can then devise policies for the disposal of those lands, preventing large scale acquisition for profit leading to creation of large- scale landowners; and allowing farmers to purchase these lands.
Thousands of families, such as those in Mahaweli resettlement areas, received grant lands. Many have taken multiple loans from microfinance companies and cannot settle the capital or interest. Some have already handed over their land permits and grant certificates to loan sharks in exchange for high-priced informal credit, outside of the legal framework. Removing the one requirement that regulates how they mortgage their properties will further expose them to predatory institutions.
The properties will go into the hands of financial institutions that will sell them to investors, many of whom are already clamouring for land, community organisations warned. Microfinance companies that were hitherto prevented from taking land as collateral or repayment for unpaid loans will p re s s u r i s e grant-holders to mortgage their properties to settle debt.