Posted: Wed Jun 10, 2009 6:51 pm Post subject: Uniform Policy, Standards&Procedures for Real Estate Va
Date 8th June 2009
Sub: UniformPolicy, Standards and Procedures for Real Estate Valuation’ for all banksto follow
The Indian Bank Association, and National Housing Bank, has appointed nodal agency to School of Planning and Architecture (SPA), [Prof. P S N Rao,] New Delhi for UniformPolicy, Standards and Procedures for Real Estate Valuation’ for all banks to follow henceforth.
Draft copy prepared byProf. P S N Rao, School of Planning and Architecture (SPA), New Delhi, has taken major part of Indian Valuation Standards.
Because they are finalizing uniform format within a month time.
The following points [comments] are already made :
 Educational qualification, (Qualification as per wealth tax act 34 AB)
 Previous work experience ( as per Norms of wealth tax act 34 AB)
 Age ( Upper Limit 70 year to be removed)
 Scale of charges
 Liability of Valuers
 Irrational Conditions imposed by the Banks on the Valuers
 Time to be Given to Valuers for making Valuation Report
 Specific Responsibility of the Bank Manager & The Valuers
 Procedure for Conflict Resolution.
Service Tax ( up to 10 lac it is not applicable so not binding ]
 Plant & Machinery Valuers are to be included.
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.
Please refer ' Policy Standards and Procedures for Real Estate Valuation by Banks and HFIs in India'.
I have gone through the said documents and my observations are as under.
1. Please refer page No. 11, Point No. 1.4 i.e. Removal of valuers from the panel of the banks or HFIs. This is the most important factor for the valuers because if the committee which looks in to the depanelment of valuers does not have any senior and qualified valuers and if the said committe is formed amongst the Bankers only then it is very likely that valuers are removed for the panel for no fault and if this happens their name will be listed and their lives would be ruined because in that case no Bank or HFI will empanel them as per policy.
I say so because I have seen valuers being removed from the panel arbitrarily, without any just reason.
Therefore, the procedure of removal should be discussed in detail so that the interest of the valuers could be safegaurded..
Posted: Mon Jun 29, 2009 1:35 pm Post subject: Comments by Valuersworld
Comment by Valuersworld on Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs in India
Part A: Policy
1.2.c. Age: Age should be no bar for healthy valuers, fix some criteria for healthy person.
1.2.d.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.
1.2.g. Other conditions: In the last three years many senior valuers has been removed by the banks. They were not given any show cause notice or any opportunity of hearing. Valuers intentions were not wrong. They were not repeating the mistakes. Because of unknowing mistakes & the mistakes of legal search of lawyers many senior valuers has been removed by the banks. Therefore such senior valuers should be considered for the empanelment. Many valuers are not registered with service tax dept, as their turn over is not more than Rs 10 lakhs. Therefore service tax registration condition should not be removed.
1.3. Duration of Empanelment: The annual performance review shall be carried out by a committee comprising of senior officers of the bank along with at least six members , one each from the different Valuers professional institutes, who will protect valuers interest.
1.4 Removal: Deliberation by a committee: The committee should comprising of senior officers of the bank along with at least six members, one each from the different Valuers professional institutes, who will hear & protect valuers interest, giving him sufficient opportunities to justify himself.
1.6. Scale of Charges: Minimum charges to be paid to an empanelled valuer for the valuation of a property shall not be less than Rs 3000/-. For photographs 4”x6” Rs 20/- per photo. Local conveyance minimum Rs 300/- Conveyance outside city, per km taxi or self vehicle @ 15% of rate of one litre of petrol. Hotel charges, eligibility of 3star hotel with addition 50% charge for out of pocket expenses. The above charges are already prescribed by Institute of Insurance surveyor & loss assessor & approved by IRDA.
1.9. Equal Opportunity: There should be category of valuers depending on valuation experience, less than 10years, more than 10 years, more than 20 years & more than 30years, accordingly work should be given to valuers. Like wise valuation more than Rs 1 crore should be given to valuers having more than 30 years experience, more than Rs 50 lakhs should be given to valuers having more than 20 years experience, between 25 lakhs to 50 lakhs should be given to valuers having more than 10years experience. Minimum valuers for any bank should be three. More thought should be given, as the valuer paying under hand commission to a bank officer will get more work & the bank officer may avoid senior valuers giving any non sense reason. In such cases there should be punishment clause for such bank officers. Paying commission to the officer is very popular amongst Insurance surveyors for allotment of work.
1.11. Obligation of the appointing Agency: Where ever the value of the property is more than Rs 1 crore, two valuers shall be appointed in order to get a second opinion. In case the difference in the valuation arrived at by both the valuers is not more than 10%, the average value is considered. In case the difference is more than 10%, then a third valuer (senior valuer having more than 30 years experience) shall be appointed and the case is examined thoroughly & the value arrived by the third senior valuer shall be considered & not the average one. Many such cases seen where the difference comes three folds, therefore averaging is not correct.
Before handing over the documents to valuers for valuation, they should be examined thoroughly by the banks lawyers or banks legal cell for the rights of the owner, rights of transfer, lease terms etc. Legal search report should be handed over to the valuer along with other documents, viz, sale deed/ lease deed, approved map etc along with a letter ( Proforma of such letter by the banker to valuer should be given in the draft). In due course the valuer should not be held responsible for wrong title of the owner or any fraudulent & all responsibility in such cases should be fixed on either lawyer of banker or the bank officer. Many valuers suffered because of such fraudulent. Whatever documents submitted to the valuer by the banker along with the said letter, the valuer will consider them legally correct & authentic & in due course if some thing goes wrong, the valuer shall not be held responsible for it.
3.3 Procedure for Periodic Performance Review: The annual performance review shall be carried out by a committee comprising of senior officers of the bank along with at least six members, one each from the different Valuers professional institutes, who will protect valuers interest.
Note: The draft should be applicable not only for housing finance, but should be applicable to all finances from Banks & financial institutions & should be suitably modified considering valuation for plant & machinery, as it is required for Bankers & financial institutions.
Valuerworld thanks Prof Dr PSN Rao of School of Planning and Architecture, New Delhi on behalf of IBA & NHB for preparing the draft of policy, standards & procedures for real estate valuation & protecting the interest of all valuers.
Posted: Mon Jun 29, 2009 3:34 pm Post subject: Comments by Vaoersworld on policy
Regarding Cl No. 1.9 "Equal oppurtunity" I would like to say that in todays cost , asset value of 90% of the properties will be more than Rs.50 lakhs . Then where is equal or fair opputunity for the budding young valuers to earn and sustain their profession . Without much income to support their practice they will become unviable and will perish. Therefore we should leave it to the banks to choose the valuers without any asset value restriction so that they can retain all valuers by giving them suitable jobs and keep them in profession and in valuation service.
Posted: Wed Jul 08, 2009 1:06 am Post subject: Comment by K.S. Bhargav on Policy, Standards and Procedures
From: K.S. Bhargava Date:06.07.09
Pola Ground, Chhindwara (M.P.)
Ref:- Your Publication First Draft (for Discussions)“Down Loaded from Computer “of dated May 2009Year
My Contention is that “Every Valuer has to be an Engineer But Every Engineer can not be a Valuer” you have said so that all Engineers Architects etc have to be graduate with experience Age limit 25-70 Years etc. Your page 8 and 9. The intellectual Property should be used irrespective of age till capable in health.
I have my submission that all those who are to be selected as “valuers “ Valuation being a science and Art” Your Page 15.
1.(a) Valuer must have minimum training of field engineering with practical economics of civil engineering knowledge under an experienced person. Who can certify about satisfactory knowledge achieved by the training for minimum 5Years.
(b) The Valuer must also have knowledge of revenue law basics, because lease laws play vital role.
(c) The Valuer must have sufficient knowledge of company law, partnership act, society act etc.
(d) Town ship by laws, also play a role in understanding and applying valuers views and costing.
2.The valuer must have complete knowledge of “rate analysis” of civil electrical and public health sanitary items applied to individual and group Housing.
3.He should be able to understand the effect of pollution problems and their ill effects in the areas concerned and also possible remedies.
4.He should be selected by a team of experts after personal interview only every 3-5 years by the concern banks and financing authorities.
5.He should also know how to reduce cases of N.P.A. for financial institution in his suggestions while valuating the particular estate, assets or loan refunds etc.
I hope this will or may help reduce N.P.A. which nation is facing. I have minimum 40 Years of field experience along with problems of projects etc. right from training conceptualizing to completions. I request you to consider above and include in your report.
C.C.: 1. Indian Banks Association (IBA)
2. National Housing Bank (NHB)
3. School of planning and architecture, New Delhi (SPA)
there seems to be no development on this front. recently at a seminar in rajkot, many valuers had raised the same question to the dignitaries, but none of the well placed valuers seemed to have a update on the same...
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