The Zamindari as well as the Ryotwari System could not fulfil the expectations of the policymakers. A third type of system called Mahalwari system was introduced in Agra, Awadh (Oudh), Central parts of India, Punjab, parts of Gangetic valley etc during regime of Lord Hastings.
Mahal refers to an estate with many cultivators. The term Mahal referred to the fiscal unit / revenue division into which the whole land was divided by Akbar. In Mahalwari system, all the proprieties of a Mahal were jointly and severally responsible, in their persons and property, for the sum assessed by the government on that Mahal. If the number of the proprietors was large, some of them were made representatives of all. The ownership and occupancy right was reserved for individual peasants. Even cultivation was to be dome individually. But for the payment of the land revenue, the peasants were jointly responsible. Usually the village as a whole would be designated a Mahal and it paid the revenue via its headman called Lambardar. Thus, Lambardars worked as a link between the individual tillers and the government, but they were not given rights like those of Zamindars. The issues with the Mahalwari system were as follows:
- In actual practice, only some big families could take the land rights not all villagers.
- The stable revenue dream of the government could not be fulfilled.
- Mahalwari was a limited reform in area as well as duration. It was a temporary settlement.
Side by side with the Mahalwari system there existed Talukdar system which recognised the Talukdar as the proprietor and gave him full control over the ryot. It differed from the zamindari or permanent system of Bengal only in as much as it was not permanent. This system prevailed in some parts of current states of Uttar Pradesh, Madhya Pradesh and Punjab.