Recent Cabinet Approval

The Union Cabinet has approved the creation of a new company to monetize and hold surplus buildings and lands of PSUs and government agencies that are being shut down or being privatized.

Overview:

  • The National Land Monetisation Corporation (NLMC), the name given to this special purpose vehicle (SPV), will be set up as a wholly-owned Government of India company.
  • The NLMC will initially have an authorized share capital of Rs 5,000 crore along with Rs 150 crore of paid-up share capital.
  • The monetization of building assets and surplus land of Central Public Sector Enterprises (CPSEs) and other government agencies will be undertaken by the NLMC.
  • This new company of the government will be set up under the finance ministry’s administrative control, will be a lean organization with few full-time employees hired on a contract basis from the market.
  • The government would be able to generate significant revenue by monetizing underused and unused assets through non-core asset monetization.

What is Asset Monetization?

Asset monetization is the process of unlocking the economic potential of underutilized or unutilized public assets in order to generate new sources of revenue for the government and its entities. Monetization will also enable the productive utilization of the under-utilized assets and will look to trigger new economic activities, private sector investments, generate financial resources for social and economic infrastructure, and boost the local economy.

Working of the NLMC

Since real estate monetization requires specialized expertise and skills in areas such as legal due diligence, market research, master planning, valuation, land management, and investment banking, NLMC will hire professionals from the private sector, just as similar specialized government companies like the National Investment and Infrastructure Fund (NIIF) and Invest India do.

NLMC is expected to hold, own, monetize, and manage building assets and surplus land of CPSEs which are under closure as well as the government-owned CPSE’s surplus non-core land assets under strategic disinvestment.

Other government entities (including CPSEs) will also be assisted and advised by NLMC in identifying surplus non-core assets and monetizing them in an efficient manner to maximize value realization.

NLMC will undertake surplus land asset monetization as an agency function in the cases of the CPSEs and listed CPSEs that are under strategic disinvestment. The NLMC will serve as a repository for best practices in land monetization, as well as assist and provide technical assistance to the government in the implementation of the asset monetization programme.

Structure of the NLMC

NLMC’s Board of Directors will consist of eminent experts, and senior Central Government officers to enable management and professional operations of the company. Through a merit-based selection process, the chairman and the non-government directors will be appointed.

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