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Day 15 – Q 5.What is land banking? How does it affect various stakeholders? Discuss.

5. What is land banking? How does it affect various stakeholders? Discuss. 

भूमि बैंकिंग क्या है? यह विभिन्न हितधारकों को कैसे प्रभावित करता है? चर्चा करें।


Land banking is the practice of aggregating parcels or blocks of land at current market rates or lower, for future sale or development. A land aggregator aggregates land by tracking the geographical and topological locations, which are primed for investment, based on social infrastructure and demographic factors.


Organisations that engage in land banking:

  • Federal, state and local governments: Government agencies use land banking to support long-term civic planning or to support future economic development. Municipalities gain and hold ownership of land to be used for new roads, metro stations, hospitals, schools, parks or for economic or residential development efforts.
  • Businesses:  The aggregators can purchase and hold undeveloped or pre-developed land parcels, which expected to increase in market value, for long-term business gains.
  • Universities and non-profit entities: Universities and non-profit entities purchase land for future growth and/or expansion in public interest.
  • Individuals: Owning properties, including land, provide a sense of security. Individuals can use land as wealth creation vehicles, either for their retirement plans, to pay for their children’s education, or to create a family legacy.


  • Land banking provides tools to quickly turn non-agricultural land into usable parcels.
  • The Government can use these lands for the public projects like highway construction, drinking water protection, afforestation, nature restoration and promote economic development. 
  • Land bank can also provide the land to the private entities for their commercial purpose. In this process local governments benefit from the rental paid by the private entities when land is paid on lease thus acquiring gainful income which is then used for the welfare of the local areas.

However, land banking also has significantly affected its stakeholders:

Government agencies:

  • Ambiguity: Buying and selling prices in various states is be ambiguous thus there is no uniformity.
  • Questionable to local residents: Most times the lands come under conflict, and result in denial of people’s rights.
  • Vacant land comes with expensive liabilities: A vacant lot owned by a land bank does not produce property tax revenue, and sometimes comes with maintenance costs.

Private entities and individuals like farmers, local residents etc: 

  • Problem with disputed land: Land banking by real estate private agencies or individuals will not deal in disputed properties, especially those under litigation. 
  • Stalling of projects: Some companies buy the lands for their projects but those projects are never carried out. This has often led to conflicts between farmers and states, stalling projects uneconomically. For example: When POSCO signed an agreement with the Odisha government to set up a steel plant in Nuagaon and nearby villages in 2005, the 700 families affected were not enthused. Over generations, the locals had developed a deep bond with the land and the forest, beyond merely as a source of employment and their only possession resulting in a decade-long resistance including legal challenges followed, at the end of which POSCO shelved the project in 2015.
  • Unable to attract investment or sell the land by the land banking entity: The full potential of land banking can only be realised, if the land is purchased in the under-developed/early phase. Land banking works on the premise of patience. Most investors ignore land banking as an investment, due to the long term nature of the business.


Land banking as a strategic response has proven to be a powerful solution, allowing public control of abandoned property; assemblage of parcels for residential, recreational, commercial and industrial redevelopment; and empowerment of communities to reverse the social and economic consequences of neglected and abandoned property. However, care must be taken to prevent disruptive and unreasonable usurping which will only lead to denial of rights rather than work in the rightful interest of people.

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