Posted: Sun Apr 25, 2010 3:24 pm Post subject: Revised Draft comments by valuersworld & other Valuers
Revised Draft comments by valuersworld:
The Indian Banks’ Association has now revised the ‘Draft Handbook’ incorporating some earlier suggestions put forth by us.
IBA has again invited feedback from all valuers on this revised draft. Please send your feedback by email to email@example.com or before 30th April 2010.
You can also send your feedback /suggestions to www.valuersworld.com . We shall collect all suggestions and send them on 30th April 2010.
Following are the comments of www.valuersworld.com on the revised draft shown in red or highlighted.
1.2 Criteria for Empanelment of Valuers
a) Educational Qualifications and Previous Work Experience
( for practicing valuers who are above 60 years of age, they must complete a 2 weeks prescribed course on Valuation within a period of 3 years of
their empanelment ).
( for practicing valuers who are above 50 years of age, they must complete a 2 weeks prescribed course on Valuation within a period of 3 years of
their empanelment ).
c) Membership of Professional Bodies
It is important that a valuer actively participates in professional activities in various professional bodies. It shall be necessary that every valuer empanelled by banks / HFIs in India be a member of any one of the undermentioned associations namely :
- Institution of Government Approved Valuers ( IGAV )
- Practicing Valuers Association of India ( PVAI )
- Centre for Valuation Studies, Research and Training ( CVSRT )
- Royal Institute of Chartered Surveyors, India Chapter ( RICS )
- American Society of Appraisers, USA ( ASA )
- Appraisal Institute, USA ( AI )
C) Membership of Professional Bodies: Name of Valuersworld (www.valuersworld.com) should also be included in the list of professional bodies as this is the only forum of valuers in India, where every member has been given the opportunity to post his independent opinion in the forum in a democratic way.
d) Categories of Valuers
The objective of categorization of valuers is to ensure that whilst lesser value assignments are handled by relatively junior valuers, the senior valuers can handle higher valuations.
The empanelment of valuers therefore shall be in the following categories :
S.No. Category ofWork Experience inValue of property for
Valuer UndertakingValuationsassignment of valuation
1 A More than 10 years No limit
2 B More than 5 years and
less than 10 years Upto Rs.25 crores
3 C Upto 5 years Upto Rs. 1 crore*
*in case of metropolitan cities, the limit shall be Rs. 3 crores.
What will happen to the valuers of A & B categories in small cities, where they will hardly find valuation of more than 1 crore & if they are allotted valuation of less than one crore, whether they will be paid fee of Category A/B or C. This issue needs to be clarified.
g) Other Conditions
In addition to the above, the other conditions to be fulfilled by the valuers for empanelment are as under :
- the valuer is a citizen of India
- the valuer has not been removed / dismissed from service (previous employment ) earlier
- the valuer has not been convicted of any offence and sentenced to a term of imprisonment
- the valuer has not been found guilty of misconduct in professional capacity
- the valuer is not an undischarged insolvent
- the valuer has 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.
- the valuer possesses a PAN Card number / Service Tax number as applicable.
At the time of empanelment, the valuer shall give an undertaking to this effect.
In extreme cases where the valuer has been found to be indulging in unfair practices, guilty of professional misconduct, violating the code of ethics and professional practice, he shall be removed from the panel. The procedure to be followed by the banks / housing finance institutions shall comprise of the following steps :
- issue of show cause notice
Handbook on Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs in India, November, 2009.
An IBA – NHB – SPA Initiative 12
- appropriate action, including removal from the panel for a periodof five years, if charges are found serious.
Last edited by anildhope on Sat May 01, 2010 9:32 pm; edited 4 times in total
Valuers once removed from the panel of any bank or housingfinance institution could be re-empanelled again after a specified period, based on the recommendations of the bank Conflict Resolution Committee. Names of valuers removed shall be reported to the Indian Banks’ Association which in turn shall place the names on its caution list.
g) Other Conditions to 1.5 Re-Empanelment
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.
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.
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. In the earlier draft the fee schedule was as per CBDT norms.
(Petrol prices are going to play major role in the economics of the country in near future, therefore basis of minimum fee, TA/DA should be based on petrol prices)
For fixing the upper limit of fee if ambiguity is left then it is to the disadvantage of the valuer because as is seen till now banks take advantage of this and fix an arbitrary upper limit of Rs.5000/- or Rs.10,000/- for valuation of any amount whatsoever.
For the maximum fee the handbook should follow CBDT norms effective from 30th Jan 2009 which has no upper limit. Negotiation should not be permitted, else the banks will take advantage & the valuer will be at the receiving end as always..
(See the valuation fee of Thailand, Malaysia & Singapore in valuersworld.com where it is without any upper limit & negotiation.) Wherever negotiation clause in the valuers fee is inserted, it will create rift between valuers & banker.
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. Institute Of Insurance Surveyors and Adjustors 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 minimum 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. Photos attached with the valuation report to be paid Rs 20/- each, any survey or preparation of map etc to be paid separately with due consideration.
In case of a valuer being engaged for a second or third opinion, fee paid to him has not been clearly specified. 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.
1.11 Date of Effect
This document shall come into effect from 01 April 2010 onwards. All banks and housing finance institutions shall take all necessary steps including board approvals and capacity building measures and prepare themselves to implement this document from the above date.
None of the banks have received any circular to implement this document with effect from 01 April 2010 onwards; you have also called for comments/ objections on this revised draft upto 30th April 2010.
PART – C
3.4 Procedure for Conflict Resolution
There are bound to be a variety of conflicts when hundreds of valuers are empanelled by various banks and housing finance institutions across the country.
In every bank / HFI, there shall be a Bank Valuation Conflict Resolution Committee for addressing all conflicts and arriving at an amicable solution. The composition of this committee shall be decided by the respective banks / HFIs. In case of any misconduct by any valuer, the bank or housing finance institution shall have the prerogative to recommend removal of the valuer from the panel. The steps involved in the process will be as given
- Issue of Show Cause Notice – the valuer shall be given due opportunity to show cause as to why action should not be initiated against him or her.
- Hearing - the valuer shall be given an opportunity to be heard so that his / her point of view is made known.
- Deliberation by the Committee - the matter shall be deliberated by the concerned Conflict Resolution Committee In case the Committee opines that the charges against the valuer are serious, the valuer may be removed from the panel and depending on the seriousness of the case, he may
be empanelled once again after a gap of 5 years.
The committee may also consider imposition of suitable finesdepending on the severity of the case against the valuer. Names of all such valuers shall be placed in a caution list of the IBA.
The maximum limit of the suitable fines should be mentioned.
3.6 Procedure for Allotting Work to Empanelled Valuers :
Every bank / housing finance institution shall maintain a Register of Valuation Work Outsourcing. Work shall be offered to valuers based on their performance and if for any reason, a valuer does not take up the work, the same should be recorded and then the work allotted to another valuer.
In small cities the preference should be given to valuers of A & B categories, because they will hardly find valuation of more than 1 crore and so will be left without work.
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.Therefore in any case banks should never lodge any complaint against the valuer in the police.
Posted: Sun Apr 25, 2010 6:34 pm Post subject: Response received by e.mail
I would like to bring to your kind attention the following:
oThe utility of a valuation report is well known but the effectiveness is purely dependent upon the quality of the work and the reporting.
oRather than a mandatory requirement to support a loan application, the report should aid the loan sanctioning official in any financial institution to get the complete information on the real existence, net worth and legal soundness of the property valued.
oThe reasons for the banking sector to have a huge NPA, is partly because of the insufficient valuation methods and often bloated valuation reports and banks caring more for a procedural support document. This often led to the legal and other difficulties to invoke the collateral in the case of default of payment of the banks’ dues.
oKeeping these essential factors in mind, the IBA should evolve a reasonable fee scale with all incidentals, for a well qualified professional experts’ work which alone could get them the quality reports to ensure a better and efficient funding situation.
Subramaniam Ragunathan BE PGDM MIE FIV MRMIA (aus) ARIMS (usa)
Posted: Mon Apr 26, 2010 12:38 pm Post subject: DRAFT ON VALUERS POLICY BY IBA
DEAR ANIL JI. THANK U VERY MUCH FOR THE COMMENTS/SUGESSIONS ON VALUATION POLICY DRAFT . I FEEL U HAVE FORGOTTON TO ADD THE DIPLOMA HOLDERS WHO R IN BANK PANEL SINCE SO MANY YEARS. ALSO KINDLY TRY TO CONSIDER THE MEMBERS OF "THE ASSOCIATION OF CONSULTING CIVIL ENGINEERS (I) AND THE INDIAN INSTITUTION OF VALUERS, PUNE." THANKING U, WITH KIND REGARDS.SNPAILOOR
Posted: Tue Apr 27, 2010 8:55 am Post subject: Comments by Sandip Kumar Deb
This is in reference to the Handbook on Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs in India. To my opinion this shall be whole heartily welcomed by the valuers community in India. This is an unique opportunity to the Institution of Valuers to join hands with IBA to start different continuing education programmes as well as bridge courses as suggested in the policy document and emerged as the most preferred premier institution in India. I am attaching herewith my clause to clause comments on this draft for your kind perusal. All the comments made in it are my own thoughts and any or all could be rejected / accepted by you. Looking forward to receive your comments soon,
Posted: Tue Apr 27, 2010 1:43 pm Post subject: Comments by RAJENDRAN S BAABU
I agree with Mr. Sandeep except the following.
Part – A – Policy
1.2Criteria for Empanelment of Valuers
a) Educational Qualifications and Previous work experience
Diploma holders also must complete a 6 months prescribed course in valuation within a period of 2 years from the date of their empanelment
Since the valuer is expected to be a honest person and man of integrity, the condition imposed by Mr. Sandeep, “valuation related” is not necessary
The valuer must possess a PAN Card only
The Service tax registration is depending on the turnover and hence it need not be compulsory.
1.3Duration of empanelment
It is mentioned that the duration is 5 years. However in 3.1 Procedure for call for Applications for empanelment and 3.3 Procedure for Annual Performance Review it is mentioned that the valuer shall be on the panel for perpetuity. It should be clarified by IBA and I do not prefer perpetual empanelment
An incidental charges of Rs.200 towards photographs, other documentation works, courier, etc. should also be insisted along with conveyance
1.9Obligations of the Bank / HFIs
Professional fees / payments to the valuers need to be paid by the Bank / HFIs with ion 30 days( instead of 45 days) after the submission of the report.
R S BAABU
3A, J P TOWER
7/2, N H ROAD
CHENNAI - 600 034
94440 71453/2825 9749
Posted: Tue Apr 27, 2010 7:46 pm Post subject: Comments by L S Narayanan
Sub: Comments/Suggestions on the Code
Minimum 3 references are asked for...what happens to a fresh Valuer
who wants to be empanelled? What happens if a Valuer does not want
jobs from more than One or Two Institutions?
Review is stated as Anuual...why not it be once in 3 yrs. Block period
considering the review procedure itself takes about 3 months .
Why should the fees be negotiable? The Quality of reports are poor
because the fees are inadequate /not commensurate with the time
spent.Hence quality Valuers are not attracted to the Nationalised/
Scheduled Banks.It is surprising that since Independance the Fees have
been revised only now and that too not anywhere linked to Cost of
Living Index ...now there is a suggestion to negotiate even this.
TA /DA should be on par with Senior Officers of the Bank or higher
since Bank Officer's have Salary & benefits in addition to TA/DA.
1.9 Supportive Documents (wherever possible)...others to be procured by Valuer
It should be mandatory for the Bank to procure all relevant Documents
reqd for Valuation including Legal Report etc before entrusting the
work to a Valuer.
Professional Fees.. within 45 days is mentioned...why should not the
payment be made as soon as the report is recd.---afterall the Valuer
is not going to run away.
2.2 d Statement of Standards: Physical Inspection by Valuer or
Qualified Valuer in the Firm.
Reporting & analsis is done by a Qualified Valuer.The person who
visits the site and collects data employed by the Valuer need not be a
Valuer himself..he only needs to be a technically experienced or/and
qualified person. This is so in case of Chartered Accountants & other
professionals-- after all responsibility is taken by the Valuer for
2.5 Code of Conduct; Review of work with knowledge of previous
Valuer...The idea of getting two independant reports will be defeated
if the report is to be in consultation.Hence no purpose will be served
if this clause is there...more so no institution reveals whether they
have already got the property Valued.
A line in reply will be
Regd Valuer CBDT & LM Institution of Valuers
Posted: Fri Apr 30, 2010 6:41 pm Post subject: Respected Anilji & D. Jagganji,
I found valuer get many dificulties to get empanneld weit bank. It is there for itshould be mendatory for the bank to registered the Valuer in Category A If he is registered with CBDT under section 34AB of the weth tax 1957, As for this registration minimum experince is 10 years and department of taxes alredy check all the experiences of the perticular person before empanelment and giving them opportunity / resposibility to work as GOVT. APPROVED / REGISTERED VALUER. I found many people face difficulties while geting empaneld with bank that they dont have such and such years of experience with banks..
Posted: Fri Apr 30, 2010 9:32 pm Post subject: draft policy on valuation by IBA
Dear Anilji, I am very happy with the sugessions put for ward by Honarable H.T.Shah, Vice president, The Institution of valuers. This will be definitely help the Diploma Engineers regarding bank empanelment. We diploma holders would like to sugesst the same view in this regard. kindly try to impliment the same. thanking u all.snpailoor. MANGALORE , KARNATAKA..
On behalf of Institution Of Valuers, Goa Branch I would like to put forth our comments on the "Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs" which is being formulated.
1. It is the opinion of our branch / members that fee structure as per amended scale of fees under 8C (1) of Wealth Tax Act may be stipulated in the said document as a basis for negotiating the fee, as otherwise it will unnecessarily lead to complications, litigations, misunderstanding between parties and also undercutting of fees by some valuers under the guise of negotiations.
2. It is also felt that senior valuers having experience for more than 10 years in the field may not be forced to undergo training / courses in valuation; provided they furnish necessary / relevant proof of their having attended seminars / workshops/ training in past.
Hope you will look into our suggestions/ grievances and take necessary actions.
Posted: Sat May 01, 2010 9:48 pm Post subject: Comments on revised draft by IOV,India.
The Sr. Vice-President (Operations & Legal),
Indian Bank’s Association, Centre 1 Building,
6th Floor, World Trade Complex, Cuffe Parade,
Sub:Draft “Hand Book on Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs in India”.
I, on behalf of the Institution of Valuers having more than 20,000/- qualified valuers operating through 40 branches all over the country appreciate the concerned Chairman and CMD National Housing Bank for streamlining the procedure of Valuation for immovable properties. The efforts made by Prof. Dr. P.S.N. Rao in bringing out Hand Book is also worth appreciating.
As desired the feedback on the report is appended herewith for suitable incorporation. Should it be necessary, these can be discussed in the meeting also.
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