KATHMANDU June 21 - The Ministry of Land Management, Cooperatives and Poverty Alleviation (MoLMCPA) has stated that the recent Supreme Court decision has only allowed people to take loans by keeping their land as collateral and that land has to be classified for fragmentation.
“The Supreme Court (SC) has issued an interim order in the name of the government allowing banks and financial institutions to issue loans against land as collateral,” said Janak Joshi, the ministry’s spokesperson.
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Senior officials from the ministry said that the Supreme Court's decision solely addressed point 7 of the 12-point regulation issued by the Department of Land Management on June 10. Point 7 states that the document should be forwarded only after the categorization of the land to be kept as collateral in financial institutions or cooperatives. A senior ministry official said, “Therefore, according to the land use regulations, there is still a provision that any piece of land should be classified before it is fragmented.”
On June 10, the department sent a circular to all land revenue offices around the nation, instructing them not to fragment any piece of land without first classifying it and not to restrict the land for loan purposes. Following the supreme court’s order, the financial institutions have started taking land as collateral. “Suppose someone owns one bigha of land; if he wants to keep only half of that land as collateral for a bank loan, he will not be allowed to do that without first classifying the land,” explains a ministry official.
Director General of the Department of Land Management, Pitamber Ghimire said that the land can be sold and transferred without classification if it doesn’t have to be fragmented while doing so. Ghimire said, "But a piece of land cannot be fragmented for the purpose of selling it without first classifying it."
