Posted: Thu Apr 08, 2010 1:42 am Post subject: Re: Effecting revised valuation policy from 1 st April
dear mr. djagan1949,
i have also enquired about new practice to be followed from 1st Apr, but not even branch managers but even higher authorities don;t know anything about it, even they don't know about any such handbook is cerculated for sugestion and supposed tobe followed from 1st april.
Draft "Hand Book on Policy, Standards and Procedures For Real Estate Valuation by Banks and HFIs in India"
Indian Banks’ Association constituted a Sub-Committee under the Chairmanship of Mr. S. Sridhar, Chairman & Managing Director, Central Bank of Indian and CMD, National Housing Bank to develop a “Hand Book on Policy, Standards and Procedures For Real Estate Valuation by Banks and HFIs in India”. The draft Hand Book is now placed on the IBA Website.
IBA has invited feedback from all interested parties on the draft Hand Book. The feedback may be sent to Senior Vice President (Operations & Legal), Indian Banks’ Association, Centre 1 Building, 6th floor, World Trade Complex, Cuffe Parade, Mumbai 400 005 to reach on or before 30th April 2010. The feedback may also be sent by email to firstname.lastname@example.org (Fax : 022-22184222 / 022-22154131).
Member / Valuers are requested to send the objections/ comments on valuers Hand book upto 30th April 2010.
Many suggestions have been incorporated in the revised draft. The main objection in the revised draft is valuers' fee, where the draft says:
1.6 Professional Fees
Depending on the nature of work involved and the value of the
property, the valuer and the bank / HFI may negotiate the fees.
However, the minimum fees to be paid to an empanelled valuer for
the valuation of a property will be as under :
Category of Valuer - A - Rs. 2,500.00
Category of Valuer - B and C - Rs. 1,500.00
Note : In case of Diploma Holders, the minimum fees shall be Rs.1,500.00
In case the valuer is required to undertake the valuation in a city
other than that in which the valuer normally resides, the bank /
housing finance institution shall reimburse the outstation travel
TA/DA charges as agreed to between both the parties in the
beginning itself before the valuer starts the assignment.
Ambiguity left to manipulate, banks will take advantage.
For the maximum fee they should follow CBDT norms effective from 30th Jan 2009.
Queries/Objections by the author for the old draft:
Clause 1.2(b) : Gradation of valuers should be done on experience basis. There should be minimum three categories of valuers viz. Category A: Valuer with experience of more than 20 years. He should be given cases with no upper limit of valuation amount., Category B: Valuer with experience of more than 10 years but less than 20 years – He can do valuations of properties valued upto Rs.60 lakhs. Category C: Valuer with experience of less than 10 years. He can do valuations of properties valued upto Rs.25 lakhs.
Further, valuation cases for second or third opinion should be given only to valuers of Category A.
Clause 1.4 : A valuer’s track record and loyalty towards the banks and his profession should also be a criterion in empanelment as well as de-panelment. It is human to err. A valuer might make mistake once in a while. But in cases of default payment by the borrower, valuers alone are made scapegoats and de-panelled, bank managers do not take any responsibility although, they have also inspected the property along with the valuer. And the bank’s legal advisor is also conveniently absolved of all responsibility as he can stand up for himself in the court of law.
A valuer’s past track record should be examined and punishment should be given only if it is found that he is engaged in fraudulent valuations habitually. For one mistake or error in judgement a valuer should be given a second chance.
Clause 1.6 : Minimum fee should be set at Rs.3000/- looking to the current cost of living (sixty times the cost of petrol per litre which ever is more) It will be advisable, if charges are fixed with utmost unambiguity, so that complications do not arise later. Local conveyance equal to six times the cost of one litre of petrol should be given. As is done by the Institute Of Insurance Surveyors and Adjustors, TA/DA charges should be clearly defined. For e.g. they pay 15% of the current petrol cost as the per kilometer mileage for taxi travel or 2-AC train fare whichever suits the valuer. It is seen sometimes that bank managers insist on train travel whereas taxi travel saves the valuer a lot of time. Lodging boarding charges should be for 3 Star hotels and daily expenses (20 times prevailing cost of one litre of petrol) should also be given to meet the out of pocket expenditure to meet his daily needs.
In case of a valuer being engaged for a second or third opinion, fee paid to him has not been clearly specified in clause 1.6. The second valuer also takes full effort in doing the valuation as the first one. So he should be paid the full fee as per the schedule.
Where two or three valuers are engaged to value the same property, the admissible difference of 5% in the valuation amount of these valuers is very less. It should be 10%.
It will also not be correct to take an average of the two values. I have come across a case where I was asked to give a second opinion for a property valued by the first valuer at more than Rs.1 crore. My valuation amount came to around Rs.40 lakhs as that was an industrial property and there were no buyers for that sick unit so the fair market value was less, whereas the earlier valuer had done the valuation considering the cost of a similar unit being set up with fresh machinery etc. Thus the law of averages would not work here.
Clause 1.9 ,1.10 & 1.11: It is a fact that bank managers give preferential treatment to big clients so as to keep them in good humour and get more business from them because of competition among bankers (needless to say that it is mutually beneficial), forgetting the fact that at times this leads to great losses to the banks. Valuers are appointed as per the choice of the client and the valuation fee is also dictated by the same client. There are many reputed, honest valuers who do not get enough work only because they do not oil the hands of the bankers or do not unduly favour their special clients.A valuer has to make daily rounds of these managers to get valuation work and get their fee paid which is very disgraceful for the valuers profession.
Miscellaneous: The banks blame the valuer also along with the defaulter parties in the FIR that they lodge with the police. Without ascertaining the facts, the police harass the valuer and extract huge sums of money from him. Valuers end up paying their life’s earnings as compensations for these cases as all the blame for non-recovery of loans is heaped upon them.
if there is Surplus of A - Category valuer, wheather Banks/FI is go for Next Category - B, C or Diploma Holder for Empanelment of Valuers in their Institution, Then What is Percentage/ Ratio of A,B,C & Diploma Valuers
Because Now - a- days Registration u/s 34AB of Wealth tax is Mandatory for SARASEI Purpose Only but Banks are Mainly insists for the same for the All valuations purpose
Posted: Fri Apr 23, 2010 6:47 pm Post subject: Hand book on Real estate valuation, Procedure, etc. for BANK
I have gone through the details of hand book published by the IBA
it is good for us if it is adopted by all banks/Hfls and implemented it. But there are few point where we have to oppose and raise our voice.
01) There should be no category like A, B, C ,diploma holders etc. & there should not different standard of fee for the different category otherwise they will prefer to lower category to give less fee at the time of allotting the file. They can allot the work depending upon the requirements and looking to experience of the panel valuers.
02) Mostly loan application in small cities, or bigger cities, are for around RS. 5.00 lakh to 25.lakhs. depending upon their income
03) it is prescribed minimum fee but they have not mentioned the maximum fee and schedule of fee. Also there should not be negotiable. Fee should be fixed as per the schedule.
04)They have not mentioned regarding fees for photographs,drawings to be prepared in absence of it. Many banks do no give extra for photographs if total fee payable increase than the maximum amount payable.
Hence I am of the opinion that we should raise our voice, simultaneously we should try our best effort for its implementations.
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