The Maharashtra Revenue and Forest Department has released a government resolution (GR) dated January 20, 2026, fixing the interest rate on advance possession of government land and the annual lease rent (bhade patta) for leased government lands at rates linked to the State Bank of India’s (SBI) Marginal Cost of Funds based Lending Rate (MCLR) as of January 1, 2025.
This update replaces the older system based on Prime Lending Rate (PLR) with MCLR, following RBI guidelines. For the entire year 2025, the applicable rates are tied to SBI’s MCLR, with the one-year tenure rate set at 9% — commonly used as the benchmark for such calculations in previous policies.
What the Circular Covers
The GR updates provisions under the Maharashtra Land Revenue Code, 1966, and related rules for government lands.
- Advance Possession (Aagau Taba): When government land is handed over for temporary or advance use (before final allotment or occupancy rights), interest is charged on the final premium/price or on any pending amount between temporary and final valuation. This interest now applies at the revised MCLR-linked rate for 2025.
- Lease Rent (Bhade Patta/Bhuibhad): For lands given on long-term lease (often to individuals, housing societies, or institutions), the annual lease rent is now fixed based on the same MCLR benchmark.
The circular specifies MCLR rates effective January 1, 2025:
- One Month: 8.20%
- Three Months: 8.55%
- Six Months: 8.90%
- One Year: 9.00% (key benchmark for annual lease/interest)
- Two Years: 9.05%
- Three Years: 9.10%
This rate remains fixed for the full calendar year 2025 and applies uniformly across the state.
How It Impacts Leaseholders and Occupiers
For common people — such as residents in housing societies, small plot holders, or businesses on leased government land — this means potential changes in annual payments.
- If your lease rent was previously based on an older, lower benchmark (from past years when MCLR/PLR was lower), the shift to 9% (one-year MCLR) could increase your annual rent burden.
- For advance possession cases (where land is occupied before final payment), interest on unpaid amounts or final premium will now accrue at up to 9%, adding to costs if delays occur.
- Many affected are middle-class families in cooperative housing societies on “collector’s land” or similar leased plots, where rent hikes directly raise society maintenance charges, impacting monthly outgoings.
This is a routine annual update to reflect current lending costs, but in a high-cost city like Mumbai, even small percentage increases can feel burdensome when multiplied over land value.
Scale of Impact in Mumbai and Maharashtra
Government-leased lands (often long-term to housing societies or individuals) are common in Maharashtra, especially Mumbai, where prime areas have historical leases.
- In Mumbai, estimates from past reports and court cases indicate around 1,500–1,600 leased parcels in south Mumbai alone, with hundreds more in suburbs (older figures from 2012 cited about 1,282 in the city and 295 in suburbs).
- Broader Maharashtra has thousands of such leased or occupancy-class II lands, with over 8,000–22,000 housing societies statewide (many in Mumbai) built on government/collector land, per recent policy discussions and redevelopment relief measures.
- Mumbai has a significant portion due to its dense urban setup and historical land grants.
While exact 2026 figures aren’t publicly detailed in one source, these properties house lakhs of residents. Any rate-linked increase (even if moderate) could affect maintenance fees or redevelopment costs for these societies. Recent policies (e.g., rent relief on 25% land value or premium cuts) have aimed to ease burdens, but this MCLR update ensures rents track banking rates.
This adjustment keeps government land usage aligned with economic realities but reminds leaseholders to check their specific agreements and prepare for possible revisions in annual dues.
