The Hindu Business Line : RBI fiat on property evaluation

To ensure a system for realistic valuation of fixed assets owned by banks or mortgaged to banks, the Reserve Bank of India has asked them to have a board-approved policy for valuation of properties.

In a notification issued on Thursday, the RBI said that such property would include collaterals accepted by banks against their exposures.

The valuation should be done by professionally qualified independent valuers. For properties valued above Rs 50 crore, banks should obtain minimum two independent valuation reports, said the RBI.

It also said banks should have in place a comprehensive policy for revaluation of fixed assets owned by them as guidelines on capital adequacy permit banks to include revaluation reserves at a discount of 55 per cent as part of Tier II capital.

The policy should cover procedures for identification of assets for revaluation, maintenance of separate set of records for them, frequency of revaluation, depreciation policy for such assets and policy for sale of such assets, among others.

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