Section 22A property errors leave Telangana home-loan applications in limbo

Errors in Telangana’s Section 22A prohibited-properties list are affecting home loans and property-backed lending, with banks keeping many applications on hold. Private property owners are also unable to sell or mortgage assets, as authorities struggle to resolve widespread erroneous property tagging.

Hyderabad: The Congress government’s alleged error in updating Telangana’s Section 22A prohibited-properties list has now moved beyond stalled registrations, creating problems for banks and housing finance companies. Home-loan applications involving properties tagged under 22A are being kept on hold in many cases, leaving borrowers caught between an administrative error and lenders’ title-risk rules.

With sale and registration of properties tagged under Section 22A blocked, fresh housing loans and loans against properties marked as prohibited have effectively been put on hold in many cases. The result is a freeze, where the owner cannot monetise the asset and the banker cannot comfortably accept it as collateral.

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Banking officials said a majority of such loan applications were being kept pending rather than rejected, particularly after the government acknowledged errors in the exercise. “Normally, such applications would be rejected. But given the ground reality and the government’s admission of the mistake, many applications are being kept on hold,” a senior manager of a nationalised bank said. He stated that an outright rejection could deny the applicant a loan and create further complications for both the borrower and the property in the future.

The problem followed a large-scale updating of the 22A list during 2025-26, in which several privately held properties were reportedly included among prohibited properties. Section 22A is intended to prevent registration of transactions involving protected categories such as assigned, ceiling-surplus, Bhoodan, Wakf, endowment, forest and water-body lands.

However, the erroneous inclusion of private properties has left owners unable to sell, transfer or mortgage their assets. The impact is particularly severe for families that depend on their property as a source of emergency liquidity for medical treatment, education, marriages or business needs.

Transactions backed by agreements and advance payments have stalled at the registration stage. In some cases, owners reportedly discovered the 22A tag only when their documents were rejected. As a result, some buyers are ending up paying EMIs for home loans after the banks processed them, but the property registration has not been completed.

For banks, the problem starts with title verification. Before sanctioning a home loan or loan against property, lenders conduct a legal check of the title. A 22A tag raises an immediate question over the property’s acceptability as collateral. Fresh housing loans and top-up loans against such properties are consequently being held up.

Existing borrowers are in a different position. Bankers said there was no immediate problem where loans had already been sanctioned, and instalments were being paid regularly. The complication arises when a borrower stops repayment on a loan secured against a property subsequently flagged under 22A. The bankers are then faced with difficulty over the security backing the loan, which is putting banks in an uncomfortable position.

The scale of the issue has added to the uncertainty. The extent of land on the prohibited list reportedly rose sharply from around 25 lakh acres during the BRS regime to more than one crore acres across the State under the Congress rule.

Nearly 90 lakh private properties may have been incorrectly tagged during an April update exercise, while more than 2.2 lakh acres are reportedly seeking removal from the list. Hyderabad and surrounding districts, including Ranga Reddy, Medchal-Malkajgiri and Sangareddy, are among the affected areas. Owners seeking relief have to approach revenue authorities with title deeds, pattas, government orders and other records.

More than three to four months after the issue surfaced, and nearly a month after the Revenue Minister apologised and acknowledged official apathy and technical errors, a comprehensive solution remains elusive. With applications reportedly piling up, officials admitted that the promised case-by-case review could take considerable time.