Valuation of properties - Empanelment of Valuers – RBI directions
RBI has suggested guidelines while formulating a policy on valuation of properties and appointment of valuers :
(a) Policy for valuation of properties
i) Banks should have a Board approved policy in place for valuation of properties including collaterals accepted for their exposures.
ii) The valuation should be done by professionally qualified independent valuers i.e. the valuer should not have a direct or indirect interest.
iii) The banks should obtain minimum two Independent Valuation Reports for properties valued at Rs.50 crore or above.
(b) Revaluation of bank's own properties
i) The extant guidelines on Capital Adequacy permit banks to include revaluation reserves at a discount of 55% as a part of Tier II Capital. In view of this, it is necessary that revaluation reserves represent true appreciation in the market value of the properties and banks have in place a comprehensive policy for revaluation of fixed assets owned by them. Such a policy should inter alia cover procedure for identification of assets for revaluation, maintenance of separate set of records for such assets, the frequency of revaluation, depreciation policy for such assets, policy for sale of such revalued assets etc.
ii) As the revaluation should reflect the change in the fair value of the fixed asset, the frequency of revaluation should be determined based on the observed volatility in the prices of the assets in the past. Further, any change in the method of depreciation should reflect the change in the expected pattern of consumption of the future economic benefits of the assets. The banks should adhere to these principles meticulously while changing the frequency of revaluation / method of depreciation.
(c) Policy for Empanelment of Independent valuers
i ) Banks should have a procedure for empanelment of professional valuers and maintain a register of 'approved list of valuers '.
ii) Banks may prescribe a minimum qualification for empanelment of valuers . Different qualifications may be prescribed for different classes of assets (e.g. land and building, plant and machinery, agricultural land, etc.).