Banks ask IBA to make model valuation plan

Banks, anticipating difficulties in adhering to the Reserve Bank of India (RBI) guideline on valuation of properties, want a model policy document to be drawn by the Indian Banks' Association (IBA).

The central bank, in January, had asked banks to put in place a system for realistic valuation of fixed assets and also prepare a panel of valuers for the purpose. The RBI had advised banks to have a board-approved policy in place for valuing properties including collaterals for loans.

Bankers say that there is no institutional mechanism to take penal action against valuers in case of any professional misconduct that could include giving a false or incorrect valuation report. There is no accredited body like the Institute of Chartered Accounts of India (ICAI) or the Bar Council of India for regulating the professional conduct of the valuers, they added.

There are a few private bodies registered as valuers but most of them are not registered under the various state laws. The government has also not laid down any specific qualifications for individuals to become valuers. Banks, however, consider persons as valuers if they meet qualifications under the Wealth Tax Act, 1957. 

Individuals with an engineering degree usually take up the work of valuation of all type of properties including land and building, plant and machinery and agriculture land given as collateral for loans. 

Banks, therefore, want the IBA to draw up an all-India panel of valuers for inspection of properties above Rs 100 crore.  The model policy would specify a format on areas to be inspected by the valuers before finalising their valuation reports.