Professional Documents
Culture Documents
Empanelment of Valuers 1.1. Criteria For Empanelment of Valuer For Corporate Loans
Empanelment of Valuers 1.1. Criteria For Empanelment of Valuer For Corporate Loans
1. Empanelment of Valuers
1.1. Criteria for empanelment of Valuer for corporate loans
The Valuer must
be professionally qualified to value assets. Preference will be given to a
firm with accounting/engineering professionals depending upon the
requirement.
be registered with the Institute of Valuers, as also under Section 34 AB of
the Wealth Tax Act.
The registration of the firm of the valuer must be at least 5 years old.
have at least 5 years experience in the valuation of assets for public sector
banks. The firm working as the valuer with debt recovery tribunals and
high courts will be preferred.
have completed at least 10 assignments successfully with public sector
banks.
The firm of the valuer and the valuer(s)/associate valuer(s) each must
have PANs.
have thorough knowledge of the industry concerned and also the type of
assets to be valued.
A valuer against whom complaints have been registered with the CBI,
Serious Fraud Investigation Cell and court(s), and is blacklisted by any
bank need not apply.
1.2. Criteria for empanelment of Valuer for retail loans are as follows:
The minimum age of the valuer must be 25 years; there is no maximum
age limit.
The empanelled valuer must be preferred if member of any one of the
professional valuer bodies – Institution of Valuers, Institution of Surveyors,
Institution of Government Approved Valuers, Practicing Valuers
Page 1 of 30
Association of India, The Indian Institution of Valuers, Centre for Valuation
Studies, Research and Training, Royal Institution of Chartered Surveyors,
India Chapter, American Society of Appraisers, USA (ASA), Appraisal
Institute, USA.
The valuer must be a graduate in civil engineering/architecture/ town
planning (or equivalent) with work experience of 5 years in the field of
valuation after completing the degree.
The valuer must have completed the 6-month long prescribed course in
valuation within a period of 5 years from the date of empanelment.
In case the valuer has a diploma in the aforementioned disciplines, he
must have work experience of 8 years in the field of valuation after
completing the diploma.
In case the valuer has passed the valuation examination, he must have 2
years of relevant work experience.
In case the valuer is a chartered/professional member of the Royal
Institution of Chartered Surveyors or American Society of Appraisers or
Appraisal Institute, no work experience is required. Training is an integral
component of the process to become a member of these organisations.
The valuers will be categorised as shown below based on work
experience:
Category Work experience in Value of property for
of value undertaking valuations assignment of valuation work
A More than 10 years No limit
B More than 5 years and less Up to INR 25 crore
than 10 years
C Up to 5 years Up to INR. 1 crore1
1
In case of metropolitan cities, the limit will be INR 3 crore.
Page 3 of 30
1.5. Independence and objectivity
All valuers empanelled by Bank must act with independence, integrity and
objectivity. They must undertake all valuation works with an independent mind
and not be influenced by anybody. The empanelled valuer must not be related to
any personnel in the Bank in the department/division dealing with the
valuation work.
2. Professional fees
a. The fee structure as above will be for each property to be valued and in
each case, out of pocket expenses for cost of photograph and other
incidental charges shall also be payable on actual basis.
b. In case the properties are located at a distance from the city,
actual cost of conveyance by road/ train (or as permitted by Zonal
Head in respect of high value properties), will be paid.
c. The Branch Manager/ Zonal Head may negotiate with the valuer for
reducing the fees, in view of the value of connection particularly in
respect of High Value properties, in consultation with the owner of the
property. The same should also be explored in the cases where the valuation
fee is being borne by the Bank.
d. If found necessary, the ZLCC, depending upon the local practice or the
type of property to be valued may fix the uniform valuation fee structure
for all the branches in the Zone not exceeding 25% of the above stipulated
fee.
e. The payment shall be made direct to the Valuer preferably through
demand Draft / Pay Order to the debit of borrower’s account.
Page 4 of 30
3. Performance Review of Valuers
3.1. The quality of service provided by the valuers will be reviewed annually by
ZLCC or as and when felt necessary.
3.2. The review reports containing inter-alia suggestions or recommendations
regarding the valuers will be sent by the Zones to the respective Functional
Departments at Head Office i.e. Functional department will be Recovery for
SARFAESI Valuers, Credit for borrowal accounts and Premises for valuation
of Bank’s own property.
3.3. The respective functional departments will examine the review reports and
further submit them with their views to the Premises department for
presenting to the Empanelment Committee for consideration at the time of
fresh or renewal of empanelment.
4. De-Empanelment of Valuers
4.1. Composition of Forum
A forum comprising of 6 General Managers i.e. GM (Law), GM (Retail Credit),
GM (Credit Monitoring), GM (Inspection & Audit), GM (Premises) & GM &
CVO will be set up to evaluate the role of valuers involved in fraud/ loss to the
Bank. The GM (law) would act as coordinator and the members will not act
as Investigators in any of the cases placed before the Forum for evaluation.
An officer of Law Department will act as Link officer who will assist the Co-
ordinator in convening meetings, sending communications from forum to
user- departments (functional Departments) and performing various related
jobs. Details of vigilance guidance in this regard are enclosed as Annexure –
I. Any change in this regard as brought out by Vigilance department will be
followed.
4.2. Quorum
The forum meetings will have a quorum of 4 members whereas the
presence of GM (Law) along with CVO & GM (Credit Monitoring) is
compulsory.
Page 5 of 30
4.3. Periodicity of Meetings
a) The meeting of the Forum will be convened as and when the
department which had used the services of empanelled valuers,
submits fraud/loss event investigation report containing evidence-
based conclusion about the involvement of concerned valuer in the
perpetration of fraud.
b) The meeting of the forum will be convened by the co-ordinator within
10 working days after submission of the evidence-based Investigation
report by the concerned department.
c) The proceedings of the meeting will be recorded and kept in file
properly so that immediate retrieval at future date is possible.
Page 6 of 30
Estimating market value should assume the highest and best use of the
subject asset. In estimating this use, one needs to analyse other uses –
possible, permissible, feasible and, finally, the highest and best use. The
following four conditions need to be met to estimate the highest and best use:
• The use must be legal
• The use must be probable and not speculative or conjectural
• There must be a profitable demand for such use
• It must bring the asset the highest net return for the longest period of
time
A. Valuation of land
To estimate and report the market value of land, the valuer must:
Set forth the valuation in a clear and non-misleading manner
Ensure that the estimate is based on appropriate market data. The market
comparables considered should be plots of similar size and use as the
land being valued. The valuer must conduct adequate and relevant
research for market comparables and analyse it to draw well-informed and
supportable judgements
Apply higher judgement in case of agricultural land to select the
comparables. The valuer should preferably have a graduate degree in
agricultural science and/or have been formerly employed as a collector,
deputy collector, settlement officer, land valuation officer, superintendent
of land records, agricultural officer, or registrar under the registration Act
1908
In case of valuation of agricultural lands, if the valuation is more than Rs.
10 crore, valuer must be a body corporate and should have a Pan India
presence and/or in case of a firm being valuer, all partners should be
members of Institution of Valuers
Ensure that the estimate is reached using the appropriate, widely accepted
methods and techniques
Provide sufficient information to permit those who read and rely on the
report to fully understand its data, reasoning, analyses and conclusions.
Comply with the requirements of the standards and reporting.
Page 7 of 30
Define the value being estimated; state the purpose and intended use of
the valuation, the effective date of valuation and the date of the report
Clearly identify and describe the land and ownership rights or interests
being valued
Physically inspect the land and describe the scope and extent of the
work undertaken
State clearly the assumptions and limiting conditions upon which the
valuation is based. Do not unquestioningly accept the data collected in an
“as is where is” form, but also consider all pertinent market evidence,
trends, recent transactions, etc.
Explain completely the valuation basis and approaches applied and the
reasons for the applications and conclusions
Include a signed compliance certificate attesting the valuer objectivity,
professional contribution, unbiased opinion, non-contingency of
professional fee and other compensation as well as applicability of
standards and disclosures
B. Valuation of buildings
To estimate and report the market value of a building, the valuer must:
Set forth the valuation in a clear and non-misleading manner
Ensure that the estimate is based on market derived data. Market
valuations are generally based on comparable buildings. The valuer must
conduct adequate and relevant research for market comparables and
analyse it to draw well-informed and supportable judgements
Ensure that the estimate is reached using the appropriate, widely accepted
methods and techniques
Provide sufficient information to permit those who read and rely on the
report to fully understand its data, reasoning, analyses and conclusions.
Comply with the requirements of the standards and reporting
Define the value being estimated; state the purpose and intended use of
the valuation, the effective date of valuation and the date of the report
Clearly identify and describe the building and property rights or interests
being valued
Page 8 of 30
Physically inspect the building, describe the scope and extent of the work
undertaken, and the extent to which the building was inspected
State clearly the assumptions and limiting conditions upon which the
valuation is based. Do not unquestioningly accept the data collected in an
“as is where is” form, but also consider all pertinent market evidence,
trends, recent transactions, etc.
Explain completely the valuation basis and approaches applied and the
reasons for the applications and conclusions
Include a signed compliance certificate attesting the valuer objectivity,
professional contribution, unbiased opinion, non-contingency of
professional fee and other compensation as well as applicability of
standards and disclosures
Page 9 of 30
Explain completely the valuation basis and approaches applied and the
reasons for the applications and conclusions
Include a signed compliance certificate attesting the valuer objectivity,
professional contribution, unbiased opinion, non-contingency of
professional fee and other compensation as well as applicability of
standards and disclosures
Additionally, the valuer should clearly and unambiguously make the following
disclosures, as applicable:
Make a proper disclosure where market data is limited or essentially non-
existent, and state whether the estimate is in any way limited by the
inadequacy of data
State clearly whether the market value estimate is based on market
evidence, or upon the valuer judgement because of the nature of the
building and lack of comparable market data
Include specific references on how the land has been viewed in terms of
its utility or its highest and best use, and a statement of all substantive
assumptions
Any departure from this standard should be clearly stated in the valuation
report along with the reasons and justification for the same. The special
circumstances which warranted departure from the established norms need to
be adequately explained.
i. First category: This includes the benefits that an entity enjoys from the
ownership of an asset. The value is specific to that entity. Although under
some circumstances the same amount could be realised from the sale of
the asset, this value essentially reflects the benefits received from holding
Page 10 of 30
the asset. It therefore does not necessarily involve a hypothetical
exchange. Investment value falls in this category.
ii. Second category: This reflects the price that two specific parties would
agree upon to exchange an asset. Although the parties may be
unconnected and negotiate at an arm’s length, the asset is not necessarily
exposed in the wider market, and the price agreed upon may reflect the
specific advantages or disadvantages of ownership to the parties involved
rather than the market at large. This category includes fair value, special
value and synergistic value.
iii. Third category: This is the value determined in accordance with a
definition set out in a statute or a contract.
The valuation methodology for assets with bases other than market
should follow similar standards as laid out in sections 5.2.1.A, 5.2.1.B and
5.2.1.C for land, building, and plant and machinery respectively. In addition
to these standards, the valuer should ensure the following:
o Distinguish clearly and unambiguously that the reported value is
not a market value estimate
o Explain fully the valuation basis approaches applied, the
reasons for the applications and the conclusions
Page 11 of 30
o Include all data used for valuation and disclose whether the
estimate is in any way limited by the inadequacy of data
Any departure from this standard should be clearly stated in the valuation report
along with the reasons and justification for the same. The special circumstances
which warranted departure from the established norms need to be adequately
explained.
5.3. Process for valuation
At the time of receipt of proposal, the branch will obtain an under-taking
from the proponent/ borrower indicating the details of the property etc.
The branch will address a letter to the particular Valuer requesting him for
valuation of property, required to be valued as per Annexure – F
incorporating clauses of Annexure - G and Annexure – H.
If the property to be valued is located at a different location, which is more
than 50 Km, the request for valuation, along with the document required
should be sent to the nearby branch, requesting them to get it valued from
an approved valuer on panel. If it is located in another zone, a similar
request should be sent to the Zonal Office concerned.
The Valuer, only on receipt of request from the branch shall proceed for
valuation of the property and shall take the photographs of the property to be
valued.
In the valuation report, the Valuer shall advise in detail, the particulars of the
property, present occupants of the property, location of the property,
measurement of the property and the name of the persons contacted by
them, at the time of valuation of property and other details as per Annexure
– D and Annexure - E.
The valuation report, duly signed by the Valuer himself will be delivered to
the branch concerned along with the photographs of the property.
In respect of properties valued at Rs. 50.00 lacs and above, it shall be
valued by two Valuers. If the variation in value is found to be more than
10% in valuation done by two Valuers, the value should be assessed as per
Para 5.4.
The Valuer, in all cases, apart from advising the present fair market
Page 12 of 30
value of the property, shall advise the forced sale/ distress sale value of the
property.
If the value of the property, is more than Rs.3.00 cr., the same shall be
got verified from the Zonal Office also. The Chief Manager / Senior
Manager (Credit) / Senior Manager as nominated by Zonal Head at Zonal
Office will verify the same. The verification report of the official will be
placed before Zonal Head before sending it to the Branch.
Basis of valuation
In the case of differences in valuation of assets done by two independent
valuers, the average of the two valuations may be taken as the notional
valuation of the property. It should also be tested whether the two reports
have used the same basis for valuation or not. In case the bases are different,
reports using bases other than market value should clearly lay out the
rationale for doing so. The concerned authority should examine the
justification provided to establish whether the right basis has been used.
Methods/techniques used
Valuers are expected to use methods and techniques that are widely
accepted and used. The use of different methods by valuers can lead to
variation in their findings. Given the situation, Bank should assess the
appropriateness of methods used and thus identify which valuation is more
accurate.
Data
Even if the valuation procedure is aligned with respect to basis and methods,
variation can result from the use of different data sets. Bank should examine
the data and establish which is more appropriate in terms of similarity with the
asset being valued, recency of data, etc.
Page 13 of 30
Underlying assumptions
The difference in value can also be a function of large variation in underlying
assumptions (or minor variation in assumptions which have high sensitivity).
Following a systematic and structured approach will enable to identify the key
assumptions behind the variation in value. A detailed study can then be
conducted of the specific assumptions instead of repeating a full valuation
effort.
Page 16 of 30
the end use of funds should be verified as stipulated in the scheme/
sanction letter. If required/ stipulated, the end use of funds should be got
verified from the Valuers of the Bank.
8. Other Guidelines
8.1. All appointments/empanelment of valuers will be done in accordance with the
provisions of this document and its amendments from time to time
8.2. All instructions to the valuer are to be given by the Bank in writing as per the
format.
8.3. Supportive documents, wherever possible, must be provided to the valuer
before the valuation work begins. Any other document will have to be
procured by the valuer and sufficient time will be provided for the same
8.4. A minimum of 3 days and a maximum of 15 days shall normally be given to
the valuer to carry out the valuation. In case of outstation properties or in
case of large property valuations, more time will be given, depending on the
circumstances, on a case to case basis
8.5. Each Branch shall maintain a register of valuers and record of valuation of
properties got conducted by them in the branch, indicating the date on
which request sent by the branch to valuer, name of the valuer, details
of the borrower, details of the properties subjected to valuation, date on
which valuation of report received, value of property and the amount of
fees paid.
8.6. The details of verification of property, giving the name of officers visiting the
property and dates visited shall also be mentioned.
8.7. Every Branch shall ensure that the cases of valuation are distributed
amongst various valuers.
8.8. No security deposits or any other indemnity money will be taken from the
valuers as security for the professional services they provide
8.9. Professional fees/payments to the valuers need to be paid by the Bank
within 45 days of the submission of the valuation report and its acceptance by
the Bank
8.10. In case the valuation report submitted by the valuer is not in order, the
Bank must bring the same to the notice of the valuer within 15 days of
Page 17 of 30
submission for rectification and resubmission. In case no such
communication is received, it will be presumed that the valuation report has
been accepted
8.11. The Valuer shall not undertake the work of valuation, in which he
or his close relatives have a direct or indirect interest.
8.12. All procedures as outlined in this document have to be followed by the
Bank.
Page 18 of 30
Annexure – A
Date: …………………
Dear Madam/Sir,
I am a valuer of immoveable properties (land and buildings/ plant and machinery) and desire
to apply to your organization for empanelment. My particulars are given below:
Name:……………………………………………………………………………….
Sex:……………………Date of Birth:…………………..…………Age:……..…..
Address:……………………………………………………...................................
………………………………………………………………………………………
……………………………………………………………………………………..
Tel No:………………………………..….Mobile:…………………………………
E-Mail:……………………………………Fax:…………………………...………..
Educational/Professional Qualifications:
University/Institute/ Examining
S.No. Body Qualification Date of Award
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
……………………………………………………………………………………...
Registration with CBDT under Wealth Tax Act (Regn. No. and date):
……………………………………………………………………………………...
……………………………………………………………………………………...
References: 1)……………………………………………………………………………………
2)……………………………………………………………………………………
3)……………………………………………………………………………………
The above information about me is true to the best of my knowledge and if found incorrect, I
Signature:………………………..
Name:………………………..
Page 20 of 30
Annexure – B
Page 21 of 30
Annexure – C
FORMATS OF UNDERTAKING TO BE SUBMITTED BY THE VALUERS FOR EMPANELMENT
UNDERTAKING
I, ...................................................................................son/daughter of …...…………………...
■ I am a citizen of India
■ I have not been convicted of any offence and sentenced to a term of imprisonment
■ I have not been convicted of an offence connected with any proceeding under the
Income Tax Act 1961, Wealth Tax Act 1957 or Gift Tax Act 1958 and
■ I have read and understood the “Handbook on Policy, Standards and Procedures
for Real Estate Valuation by Banks and HFIs in India 2010” of the IBA and fulfil all
■ I undertake to keep you informed of any events or happenings which would make
■ I have not concealed or suppressed any material information, facts and records and
Dated: …………………………….
Signature……………………………….
Name…………………………………...
Address…………………………………
…………………………………………
Page 22 of 30
Annexure – D
III Town planning 1. Master plan provisions related to the property in terms of land
parameters (if use
applicable) 2. Planning area/zone
3. Development controls
4. Zoning regulations
5. FAR/FSI permitted and consumed
Page 23 of 30
S. No. Chapter Content
6. Ground coverage
7. Transferability of development rights if any, building bye-law
provisions as applicable to the property viz. setbacks, height
restrictions, etc.
8. Comment on surrounding land uses and adjoining properties
in terms of usage
9. Comment on unauthorized constructions if any
10. Comment on demolition proceedings if any
11. Comment on compounding /regularisation proceedings
12. Comment on whether OC has been issued or not
Any other aspect
Page 24 of 30
S. No. Chapter Content
aspects 2. Details of monthly rents being received if any including status
of tenancy rights
3. Taxes and other outgoings
4. Property insurance
5. Monthly maintenance charges
6. Security charges, etc.
7. Any other aspect
VII Functional and Description of the functionality and utility of the asset in terms of:
utilitarian 1. Space allocation,
aspects 2. Storage spaces,
3. Utility of spaces provided within the building,
4. Any other aspect
Page 25 of 30
S. No. Chapter Content
IX Marketability Analysis of the market for the property in terms of
1. Locational attributes
2. Scarcity
3. Demand and supply of the kind of subject property
4. Comparable sale prices in the locality.
XII Architectural and Descriptive account on whether the building is modern, old
aesthetic quality fashioned, etc., plain looking or with decorative elements,
heritage value if applicable, presence of landscape elements, etc.
XIII Valuation Here, the procedure adopted for arriving at the valuation has to
Page 26 of 30
S. No. Chapter Content
be highlighted.
and fulfill the education, experience and other criteria laid out
therein.
……..…………………………………………………………
……..…………………………………………………………
……..…………………………………………………………
……..…………………………………………………………
Page 27 of 30
S. No. Chapter Content
Name of Valuer Association of which I am a bonafide member in
Mobile no………………….………………………………
E-Mail …………………………………..…………………
Page 28 of 30
Annexure - E
FORMATS OF VALUATION REPORTING (TO BE USED FOR ASSETS OF UP TO
INR 5 CRORE)
1 Customer Details
Name Apl. No.
Case Type
2 Asset Details
Address
Nearby Landmark
3 Document Details
Layout Plan Yes/no Name of Approving Approval
Auth. No.
Building Plan Yes/no Approval
No.
Construction Yes/no Approval
Permission No.
Legal Documents Yes/no List of Documents
4 Physical Details
Adjoining East West North South
Properties
Matching of Yes / no Plot Yes/no Approved Type of Plotted/Flat
Boundaries demarcated Land use Property
No. of Living/ Bed rooms Toilets Kitchen
rooms Dining
Total no. Floor on Approx. Residual Type of
of floors which age of age of structure –
the the the RCC
property property property framed /
is Stone / BB
located masonary
5 Tenure / Occupancy Details
Page 29 of 30
Status of Tenure Owned / Rented No. of years of Relationship
occupancy of tenant to
owner
6 Stage of construction
Stage of construction Under construction / completed If under construction, extent of
completion
7 Violations if any observed
Nature and extent of
violations
9 Valuation
10 Assumptions
/ Remarks
12 Name, Date of
address & valuation
signature of Signature of the
Valuer Valuer
13 List of
Documents
enclosed
14 List of
Photos
enclosed
Page 30 of 30