Property registrations drop as big notes go out of circulation

The  number of property registrations across the state has come down by one-third during the last two days - an immediate fallout of the demonetisation of Rs 500 and Rs 1,000 currency notes.

“On an average, the number of property registrations is around 6,000 a day at sub-registrar offices across the state. But during the last two days, we had around 4,000 registrations. The number of registrations has dipped by one-third after the announcement of demonetisation,” says Inspector General of Registration and Commissioner of Stamps Manoj Kumar Meena.

In Bengaluru, the number of property registrations has come down from an average of 1,000 per day to  800 during the last two days.

And, this could just be the beginning. For, most of the registrations during the last two days have been through demand drafts (DD) and cheques already prepared before November  9 — the day Rs 500 and Rs 1,000 currency notes ceased to be a legal tender.

According to sources in the property sector, the impact of demonetisation has been on the secondary real estate market where properties are bought on resale using the cash element. In this market, up to 40% of the transactions are done with black money for which invariably, notes of Rs 500 and Rs 1,000 denomination are used, the sources added. A large number of transactions could be cancelled in the coming days as the flow of black money is checked.

However, there will be no problem for property buyers using accounted money for purchases or paying through bank loans. At the same time, prospective genuine buyers may wait for some time for the uncertainity in the market to end. These factors have added up resulting in a decline in registrations and is likely to continue in the coming weeks.

Revenue Shortfall?
The stamps and registration department is keeping its fingers crossed as the dip in registrations would eventually result in revenue shortfall. The department has been set a target of Rs 9,100 crore for the fiscal 2016-17.

The department is planning to popularise e-transfer of payments from banks through the Kajane-2 software linked to treasuries, Meena said. There may be a slump in the registration of vehicles in the coming days. However, it is too early to take a call, officials said.

At the same time, demonetisation has not affected the day-to-day financial transactions of the state’s biggest financer - the Karnataka government.

Finance Department Secretary (Budget and Resources) Arvind Srivatsava said a majority of the day-to-day financial transactions of the state government are done electronically or through cheques. The expenditure of the state government for 2016-17 is estimated at a whopping Rs 1.6 lakh crore and includes payment of salaries and pension, grants for various schemes and programmes, repayment of loans, interest, scholarships among others.

Srivatsava said there is a very minimal direct cash transactions within the government. “Except for some cash kept for office contingencies, the other transactions are through e-transfer or cheques. The state treasuries form the front-end for the payments,” the officer said.