management of credit portfolio - policy on valuation of

Credit Policy & MSME Department: Central Office

239, Vidhan Bhavan Marg, Nariman Point, Mumbai - 400 021. INSTRUCTION CIRCULAR NO:1880-2020 05th March 2020

TO ALL BRANCHES/OFFICES

1. The maiden Policy on Valuation of Properties and Empanelment of Valuers of Union Bank of India was approved by the Board on 15.06.2007. Thereafter the policy is reviewed from time to time on annual basis in the light of statutory, regulatory guidelines and market requirements. The Policy on Valuation of Properties and Empanelment of Valuers 2019-20 was reviewed and approved by the Board in its meeting held on 18.09.2019 and the validity of the policy was up to 30.09.2020.

2. In compliance with the process of amalgamation, the credit policies of the 3

Banks [Union Bank of India (as an Anchor Bank), Andhra Bank & Corporation Bank] need to be harmonized/ realigned with the existing policies of all the 3 Banks and best practices followed in the industry.

3. In line with the same, the Policy on Valuation of Properties and Empanelment of Valuers 2020-21 for the amalgamated entity (Union Bank of India) has since been approved by the Board in its meeting dated 25.02.2020.

4. The Policy on Valuation of Properties and Empanelment of Valuers for 2020-21 for amalgamated entity will be effective from 1st April 2020. Kindly note that the existing Policy on Valuation of Properties and Empanelment of Valuers (2019-2020 issued vide IC 1701-2019 dated 25.09.2019) is now effective till 31.03.2020 only.

5. The Policy on Valuation of Properties and Empanelment of Valuers 2020-21 will be valid upto 31.03.2021 and continuity of the policy may be extended for a further period of 3 months with the specific approval of MD&CEO.

6. Branches/Offices are requested to take a careful note of the above and ensure compliance.

Management of Credit Portfolio -

Policy on Valuation of Properties and Empanelment of Valuers 2020-2021

CP&MSME Department, Central Office

Policy on Valuation of Properties and Empanelment

of Valuers 2020-21 2020-21

Policy on Valuation of Properties and Empanelment of Valuers

INDEX

Para Subject Pg. No.

1. Preamble 1

PART-I

2. Purpose of Valuation and Appointment of Valuers 3

3. General guidelines on Valuation 3

4. Guidelines for Empanelment of Valuers

4.1 Criteria for Empanelment of Insolvency and Bankruptcy Board of India (IBBI) Registered Valuers

7

4.2 Criteria for Empanelment of Valuers who are not Registered Valuers of Insolvency and Bankruptcy Board of India (IBBI)

8

4.3 Educational Qualifications and Previous Work Experience 8

4.3.1.1 Valuation of Land & Building / Real Estate 8

4.3.1.2 Valuation of Plant and Machinery 10

4.3.1.3 Valuers of Agricultural land 12

4.3.1.4 Valuers of Agricultural Land (Plantations) under Wealth Tax Rule 8A(4)

13

4.3.1.5 Valuers of Stock (Inventory), Shares 13

4.3.2 Proof of Experience 14

4.4 Minimum Age Requirement 14

4.5 Membership of Professional Bodies 14

4.6 Categories of Valuers 15

4.7 Registration with Government 15

4.8 References 16

4.9 Compliance of Standards and Procedures/Methodologies 16

4.10 Obligations of the Bank 18

4.11 Empanelment Procedure 19

4.12 Duration of Empanelment 21

4.13 Payment of Professional Fees 21

5. Resolution of Conflict 22

6. Removal/De-listing of Valuers from Bank’s Panel 22

7. Re-Empanelment 23

8. Delegation 23

PART-II Policy dealing with valuation of properties and empanelment of valuers those required under Companies

25


Para Subject Pg. No.

(9-16) Act,2013

PART-III

17. Other Matters 29

18. Ownership 29

19. Compliance 30

20. Modification and Review 30

21. Matters pertaining to amalgamated entity: 30

Annexure-I

Format-A Valuation Report (In respect of Land / Site and Building) 33

Format-B Valuation Report (In respect of Agricultural Lands) 40

Format-C Valuation Report (In respect of Flats) 44

Format-D Valuation Report (In respect of Land / Site and Building, Agricultural Land and Flats offered only as Collateral Security for credit limits upto Rs. 10.00 lacs.

49

Format-D1 Valuation Report (In respect of Plant & Machinery) 52

Annexure-II Declaration from Valuers 55

Annexure-III Model Code of Conduct 57

Annexure-IV Undertaking to be submitted by the valuers for empanelment

61

Annexure-V Application for Empanelment of valuers 62

Annexure-VI Format for recommendation of Regional Office for valuers 65

Annexure-

VII Letter of Indemnity by Engineers / Valuers 66

Annexure-

VIII Format for Register of ‘Approved List of Valuers’ 67

Annexure-IX Guidelines for Payment of Professional Fees 68

Annexure-X Format for De-Listing of Valuers 69

Annexure-XI Format for submission of agenda to Empowered Forum 70

Annexure-

XII

Format for review of Performance for Bank’s empanelled valuers by RO

71


LIST OF ABBREVIATION AI Appraisal Institute

ACB Audit Committee of Board

AGM Assistant General Manager

Apps Applications (Internet-based)

ARC Asset Reconstruction Company

ASA American Society of Appraisers

CAC Credit Approval Committee

CLFSC Central Office Level Fraud Scrutiny Committee

CoC Committee of Creditors

CP&MSME Credit Policy & Micro, Small and Medium Enterprises

CRAR Capital to Risk Weighted Asset Ratio

CRMC Credit Risk Management Committee

CRZ Coastal Regulatory Zone

CVSRT Centre for Valuation Studies, Research and Training

DGM Deputy General Manager

FI Financial Institution

FGM Field General Manager

GM General Manager

GPS Global Positioning system

IBA Indian Banks’ Association

IBBI Insolvency and Bankruptcy Board of India

IBC Insolvency and Bankruptcy Code

ICAI Institute of Chartered Accountants of India

IFB Industrial Finance Branch

IFRS International Financial Reporting Standards

IGAV Institution of Government Approved Valuers

IIV The Indian Institution of Valuers

IND AS Indian Accounting Standards

IOS Institution of Surveyors (Valuation Branch)

IOV Institution of Valuers

IRP Interim Resolution Professional

IVS International Valuation Standard

IVSC International Valuation Standard Council

LCV Large Corporate Vertical

MBA Multiple Banking Arrangement

MCA Ministry of Corporate Affairs

MD&CEO Managing Director and Chief Executive Officer

MSME Micro, Small and Medium Enterprises

NCLT National Company Law Tribunal

NPA Non Performing Asset

OTS One Time Settlement

PAN Permanent Account Number

PVAI Practicing Valuers Association of India

RBI Reserve Bank of India

RCC Reinforced Cement Concrete

RICS Royal Institution of Chartered Surveyors, India Chapter

RMD Risk Management Department

RP Resolution Professional

SARFAESI Act Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act

TPE Third Party Entities

T.S. No. Town Survey Number

ZLFSC Zonal level Fraud Scrutiny Committee


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1. Preamble: 1.1 Valuation in a broad sense means assessing the worth of something which may

be tangible assets like land or something intangible like goodwill. There are various methodologies of valuation. The Bank is concerned with fair market value of the property that can be expected from a buyer if the property is put to sale. Hence, conclusion drawn by the valuer in valuation report about the property needs a careful examination by the Bank.

1.2 What is of utmost importance is that the reasons for arriving at the value of a

property accepted as security must be carefully followed and duly recorded for reference at a later date.

1.3 The word „fair market value‟ (also commonly used as Market Value) used herein

should be understood as the price that the property (Land & Building, Plant & machinery etc) taken as security would fetch on sale in open market on the relevant date of evaluation. International Financial Reporting Standards (IFRS)/ IND AS defines Fair Value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

i. Fair value represents exit price and not entry price ii. Transaction price is the entry price iii. Exit price of an asset or liability is different from entry price. iv. Fair value is market-based measurement, not an entity specific

measurement. v. Fair Value measurement is not adjusted for transaction costs.

1.3.1 The concept of Fair Market Value vis-à-vis Net realizable value helps in

ascertaining the cushion available to the Bank in case the account turns non performing. However, the fair value measurement is not adjusted for transactions costs. Transaction costs can be termed as a reasonable estimate of the costs associated with either the eventual sale or the disposal of the asset in question. Fair market value less transactions costs is the net realizable value of the security i.e. Market Value minus Cost of Disposal.

1.3.2 Cost of realization ordinarily comprise of costs such as advocate fee, expenses

for publication of notices, fees payable to DRTs and other costs that Bank will be incurring if Bank decides to recover the NPA through litigation in courts or under SARFAESI Act. Over a period of time, our experience suggests that such

POLICY ON VALUATION OF PROPERTIES AND EMPANELMENT OF VALUERS (Excluding valuation of Fixed Assets owned by the Bank)


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costs generally range upto 10% of the value of security. Hence, realization cost can be taken at 10% (maximum) of the value of securities.

1.4 The process of valuation requires the valuer to make impartial judgments as to

the reliability of inputs and assumptions. For a valuation to be credible, it is important that those judgments are made in a way that promotes transparency and minimizes the influence of any subjective factors on the process. Judgement used in a valuation must be applied objectively to avoid biased analyses, opinions and conclusions.

1.5 Initially, valuation of assets and empanelment of valuers was not regulated by

any Act or Law. In such a situtation, in order to formulate uniform guidelines with respect to valuation of assets and empanelment of valuers, Indian Bank Association (IBA) constituted a Working Group on Standardization of Empanelment of Valuers by Senior Executives of Member Banks. Last such guidelines were issued by IBA in Feb, 2017 and the same were approved and implemented in our Bank vide the Policy on Valuation of Properties and Empanelment of Valuers.

1.6 In exercise of the powers conferred by section 247 read with sections 458, 459

and 469 of the Companies Act, 2013 (18 of 2013), the Central Government Ministry of Corporate Affairs notified the Companies (Registered Valuers and Valuation) Rules, 2017 on 18th Oct 2017. Section 247 of the Act requires that where a valuation is to be made of any property, stocks, shares, debentures, securities or goodwill or any assets or net worth of a company or its liabilities under the provisions of the Act, the same shall be valued by a person having the requisite qualifications, experience, registered as a valuer and member of a registered valuers organisation, in the manner prescribed in the Rules. In addition, to administer and perform functions under the said rules, the Ministry of Corporate Affairs (MCA)by way of notification on 23 October, 2017, has specified the Insolvency and Bankruptcy Board of India (IBBI) as the responsible authority.

1.7 Though these rules were supposed to come into effect since 18th Oct 2017, the

same is being deferred till 30.09.2018. In taking up the matter with Indian Bank Association (IBA) on the applicability of the aforesaid notified rules ,IBA informed that

i. The valuation as per the Companies (Registered Valuers and Valuations) Rules,

2017 issued by the Ministry of Corporate Affairs on 18.10.2017 would be applicable for valuation required under Companies Act, 2013 from the date on which the rules become effective.

ii. IBA‟s existing guidelines shall continue to be applicable for valutions which are

not mandatorily required to be done under Companies Act, 2013.


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iii. Thus two parallel systems of valuation and valuers would continue at least for some time unless uniformity is brought by amendment of other laws and / or issuance of directions / guidelines by the concerned Regulator, making it mandatory to follow the subject rules.

1.8 In view of the same, the Policy is now divided into three (3) parts -

1.8.1 Part I: Policy dealing with valuation of properties and empanelment of valuers other than those required under Companies Act ,2013.

1.8.2 Part II: Policy dealing with valuation of properties and empanelment of valuers those required under Companies Act, 2013.

1.8.3 Part III: Others Matters

Part I

Policy dealing with valuation of properties and empanelment of valuers other than those required under Companies Act ,2013.

2. Purpose of Valuation and Appointment of Valuers:

2.1 To ascertain the value of the property offered as security.

2.2 To periodically ascertain the value of the asset that has been mortgaged, whether it is increasing or decreasing over the mortgage period

2.3 To realize the value of non-performing assets ( NPAs )

2.4 Redemption of properties in cases of default.

3. General guidelines on Valuation:

3.1 The valuation should always be got done by an empanelled independent valuer i.e., the valuer should not have a direct or indirect interest in the asset being valued.

3.2 All the necessary / relevant papers / documents should flow directly from the branch to the valuer & vice versa without routing the same through the borrower / guarantor concerned.

3.3 The Valuation Report to be submitted by the valuers should be strictly as per enclosed format A, B, C, and D & D1 (Annexure-I). It should also be ensured that the report invariably contains the Fair Market Value, the Book Value, the Distress Value and the Net Realisable Value of the property being valued. However, for the purpose of determining the present value of the property mortgaged / to be mortgaged, the Net Realisable Value should be taken into consideration. Also in the case of Plant & Machinery, Net Realisable Value to be accepted for valuation purposes.

3.4 One of the components of relevant format is “Total abstract of the entire property” which is an arithmetical sum of the value of land / building


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(including replacement cost) / amenities etc. However, the final para of the reports lays emphasis on the “Present fair market value of the property”. Often it is observed that “Total abstract of the entire property” is taken as “fair market value” of the property by the valuers and same is duly accepted by the Branches. The “fair market value” may vary from the abstract cost.

3.4.1 In valuation report, Branch officials make a comment on “fair and

reasonable market value” which should not be construed as “Fair Market Value” of the property. The Branch official to use their judgement for ascertaining the fair and reasonable value of the property.

3.5 For credit limits up to Rs.10.00 lacs, the valuation of property, offered only as collateral security, should be made by the Bank Officials themselves and details of such valuation should be incorporated in the simplified format as per the format – D. However, this is not applicable for valuation of property, which is primary security even if credit limit in such account are upto Rs.10.00Lacs. The task of valuation in such cases should necessarily be got carried out through empanelled valuers only.

3.6 Branch should verify the correctness of the valuation by making independent verifications with respect to the valuation and certify to that extent in the valuation report itself as per certificate given in format A, B & C.

3.7 A declaration should necessarily be obtained from valuers with every valuation report as per the format – E (Annexure-II) along with a signed copy of the Model code of conduct for valuer as given in Annexure III.

3.8 Two independent valuations are to be obtained from the panel valuers in cases where the value of any particular property (ies) is Rs 5 crores and above. This condition applies when any individual (single) property value is Rs 5.00 crs and above. In such a case the value which is lower as per report to be taken into cognizance.

3.8.1 In consortium meetings, the Bank‟s representative should insist for second valuation as per extant guidelines of the Bank. However, the consensus decision as taken in the meeting will be followed and will not be construed as a deviation to Bank‟s guidelines.

3.9 Properties mortgaged / Fixed Assets hypothecated are to be got revalued at least once in 3 years.

3.10 Property shall be valued at or less than the current fair value under which the asset could be sold under private contract between a willing seller and an arm‟s length buyer on the date of valuation. Valuation based on potential value after the development when the development is yet to take place shall be avoided.

3.11 Further, following modalities should also be adhered to:

3.11.1 As soon as the valuation reports are obtained, it should be verified and ensured that they contain all the details. Blanks and cursory reports should


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not be accepted. Further, all the columns in the format of valuation reports should be duly filled in with remarks and finding of the valuer and if column is not applicable then a notation to that effect should be made. A valuation report containing blanks should not be accepted.

3.11.2 As a measure of strengthening the Due Diligence of the applicable primary/collateral securities which are Land & Building/Land in nature/Plant & Machinery/Other tangible assets, valuers to include photograph of owner with the property in the background, in the report submitted to Branches for all property(ies). In case owner is not available his/her representative may be considered for obtention of photograph.

3.11.3 For easy identification of the applicable primary/collateral securities which are Land & Building/Land in nature/Plant & Machinery/Other fixed tangible assets, valuers to mention longitude/latitude and co-ordinates of the properties valued in the valuation report. If possible screen shot (in hard copy) of Global Positioning System (GPS)/Various Applications (Apps)/Internet sites (eg Google earth)/etc is to be included in the valuation report. In case same is not technically feasible (due to unavailability of network etc) the reason for same is to be mentioned in the valuation report.

3.11.4 In the column pertaining to valuation in the format where valuer is required to mention the prevailing market rate another column should be added and details /reference of at least two latest deals/transactions with respect to adjacent properties in the areas will have to be mentioned. Valuation reports without those details should be returned to the valuer for resubmission.

3.11.5 Valuers are engaged by the Bank for taking valuation report on the asset offered as security. As per International Valuation Standards 2017, Valuer has been defined as “an individual, group of individuals, or a firm possessing the necessary qualifications, ability and experience to undertake a valuation in an objective, unbiased and competent manner. Hence, valuation report procured directly by the borrowers should not be relied upon even if the report is from our panel valuer. If the borrower produces a valuation report issued by one of our panel valuers, the property should be referred to another valuer on our panel for fresh and independent valuation.

3.11.6 Valuation Report must contain specific views / comments on the impending threat, if any, of Road Widening, Take-over of property for public service purposes, Sub-merging, Attracting provisos of Coastal Regulatory Zone (CRZ) etc.

3.11.7 The valuation of properties to be reckoned with reference to their registered price during first year after the registry has been made. Though the valuation in respect of these securities should be done but the value of registered price is to be taken as value of security or valuation as per valuer report whichever is lower so as to avoid acceptance of inflated value of securities in case of newly purchased securities. Also, it is to be ensured that


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the purchase of securities which is not stipulated by the Bank as the end use of the loan should not be allowed after sanction of the loan especially in cases where sanctioning authority has given a stipulation of certain percentage amount of collateral securities vis-à-vis loan amount irrespective of the fact whether it is a new property / agricultural property / piece of land, etc.

3.12 Guidelines for valuation of land applicable to all proposals including Real Estate proposals are as detailed below: i. The valuation of properties to be reckoned with reference to their

registered price during first year after the registry has been made. Though the valuation in respect of these securities should be done but the value of registered price is to be taken as value of security or valuation as per valuer report whichever is lower so as to avoid acceptance of inflated value of securities in case of newly purchased securities.

ii. If the land is acquired / purchased beyond preceding one year, the net realizable value assessed by the Bank‟s approved valuer should be taken as value of the property. In case where acquisition / purchase cost of the land is Rs.5 crores and above, and there is wide variation between acquisition / purchase cost and net realizable value assessed by the Bank‟s approved valuer, valuation of such land should be obtained from two Bank‟s approved valuer and lowest valuation should be taken as net realizable value of the property.

iii. In respect of any particular property/ies offered as prime/collateral security valued at Rs.2 crores and above, Title Search Report from two advocates shall be obtained.

3.13 Valuation Report/s by empanelled valuer/s of Member Bank/s in consortium / Multiple Banking Arrangement (MBA) account may be accepted by the Bank unless otherwise specified by the Sanctioning Authority. A certified copy of aforesaid valuation report/s from the concerned member bank should be kept on record. The aforesaid mechanism is applicable for valuation reports obtained by Public Sector Banks on commonly charged security. However, security exclusively charged to our Bank should be valued by our empanelled valuer/s only.

3.14 Branches/Offices to ensure that residual age of the immovable property should be at least 5 years more than the tenure of the loan.

3.15 As and when the Bank decides to value its own property/s as per the Policy for Purchase / sale of immovable property, the valuation shall be done by the empanelled valuers of the Bank.

3.16 At the time of substitution of existing property with new property, fresh valuation of existing property should be obtained, irrespective of when the last valuation was obtained. The higher of the above i.e. existing or fresh valuation should be considered for the purpose of substitution.


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4. Guidelines for Empanelment of Valuers

4.1 Criteria for Empanelment of Insolvency and Bankruptcy Board of India (IBBI) Registered Valuers

4.1.1 The Ministry of Corporate Affairs (MCA) has notified the provisions governing valuation by registered valuers [section 247 of the Companies Act, 2013 (the Act)] and the Companies (Registered Valuers and Valuation) Rules, 2017 (the Rules). In addition, to administer and perform functions under the said rules, the MCA by way of notification on 23 October, 2017, has specified the Insolvency and Bankruptcy Board of India (IBBI) as the responsible authority.

4.1.2 The notified Rules lays down the criteria for individuals, partnership entities and companies to be eligible to be registered as valuers under the Act. The Registered Valuer under the Companies (Registered Valuers and Valuation) Rules, 2017 will be eligible to be empanelled on our Bank on specific request (As per Annexure V).

4.1.3 In case valuer is registered with IBBI, any divergence to the empanelment

requirement as given in Part I of this policy will not be construed as deviations. Effectively IBBI registered valuer will be eligible for empanelment by our Bank on specific request of the valuers. For IBBI registered valuers, the same procedure will be followed for empanelment as per para 8.

4.1.4 In case of cancellation or suspension of certificate of registeration or

recognition of valuers under Chapter IV of Companies (Registered Valuers and Valuation) Rules 2017, such valuers will also be delisted from Bank‟s panel of valuers and such cases be placed before the committee headed by GM (as given in para 8) for information. In case of valuers registered by IBBI and empaneled by our Bank but IBBI has not cancelled / suspended the registeration, such valuers may be delisted based on delisting procedure as applicable for other valuers.

4.1.5 As per Companies (Registered Valuers and Valuation) Rules 2017, Rule 4 - the

registered valuer will be undertaking valuation of an asset for which the registration as a valuer is in place i.e Land & Building, Plant & Machinery, Securities of financial asset, or any other asset specified by the authorities under Companies (Registered Valuers and Valuation) Rules 2017 as given in Annexure IV of the Companies (Registered Valuers and Valuation) Rules 2017.

4.1.6 The registered valuer of IBBI will be eligible for the valuation of the asset class they are eligible and same will be communicated by CP&MSME to the respective RO where they are empanelled/or being empanelled.


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4.2 Criteria for Empanelment of Valuers who are not Registered Valuers of Insolvency and Bankruptcy Board of India (IBBI)

4.2.1 The valuers should be registered under Section 34 AB of the Wealth Tax Act, 1957.

4.2.2 In order to ascertain the value of properties, external independent valuer/s are appointed by the Bank for undertaking the valuations. The empanelled valuers shall carry out valuation of different types of assets as under: i. Land and Building

ii. Plant & Machinery

iii. Agricultural Land

iv. Any other class of Asset

4.3 Educational Qualifications and Previous Work Experience

4.3.1 The valuer should possess proper educational qualifications to make him /

her competent to carry out the task of valuation of securities. In addition, relevant work experience is also important. Hence, persons possessing the following Educational Qualifications and Work Experience shall be eligible for empanelment as valuers:

4.3.1.1 Valuation of Land & Building / Real Estate: 4.3.1.1.1 There is no Act to regulate profession of valuation of real estate in our

country. However, from 01.01.2020, for fresh empanelment, preferably only academically qualified valuers possessing following qualifications in valuation of Land & Building / Real Estate shall be empanelled:

- Post Graduate degree in valuation of real estate from a recognised

university i.e. the universities established under State or Central Acts with 2 years‟ experience in valuation of real estate.

4.3.1.1.2 The educational qualifications for empanelment as valuers of Land & Building / Real Estate till 31.12.2019* shall be as under:

S. No.

Educational Qualifications

Work Experience

Remarks

1 Bachelor‟s degree in Civil Engineering / Architecture / Town Planning

5 years‟ work experience in the field of valuation of real estate after

The Applicants with these qualifications should preferably possess an additional qualification in the form of a certification examination on or before 31.12.2019 of duration of one semester


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S. No.


Work Experience

Remarks

or equivalent. completion of the degree or equivalent

or above in the subjects which are vital for valuation of real estate and not covered in course curriculum of civil engineering, architecture and town planning from recognized university established under state or central acts.

Note: The applicants empanelled on the basis of criteria laid down under Sr.no.1 shall be eligible for empanelment even after 01.01.2020.

2 Diploma in Civil Engineering / Architecture.

8 years‟ work experience in the field of valuation of real estate after completion of the diploma

They should preferably complete course in valuation of real estate as prescribed under Sr.no.1 above. Note: The applicants empanelled on the basis of criteria laid down under Sr.no.2 shall be eligible for empanelment even after 01.01.2020.

3 Pass in examination in valuation of real estate recognized by the Govt. of India for recruitment to superior services or posts conducted by any institution

2 years‟ work experience in the field of valuation of real estate after completing the examination

-

4 Master‟s degree in Valuation of real estate awarded by a recognized University of India i.e. University established under State or

2 years‟ work experience in the field of valuation of real estate after completing the examination

-


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S. No.


Work Experience

Remarks

Central Act

5 Chartered / Professional membership of the Royal Institution of Chartered Surveyors (RICS) of American Society of Appraisers (ASA) or Appraisal Institute (AI), USA / Other internationally reputed institutional players who fulfill the criteria - obtained by passing an examination equivalent to examinations mentioned under Sr. No.(3) & (4) above.

- Since the process of procurement of membership with these organizations includes training as an integral component, no further experience requirement is being prescribed.

(*present guidelines to continue till further instructions from IBA)

4.3.1.2 Valuation of Plant and Machinery:

4.3.1.2.1 There is no Act to regulate profession of valuation of plant & machinery in our country. However, from 01.01.2020, preferably only academically qualified valuers possessing following qualifications in valuation of plant & machinery shall be empanelled:

- Post Graduate degree in valuation of plant & machinery from a

recognised university i.e. the universities established under State or Central Acts with 2 years‟ experience in valuation of plant & machinery.

4.3.1.2.2 The educational qualifications for empanelment as valuers of Plant &

Machinery till 31.12.2019 shall be as under:


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S. No.

Educational Qualification

Work Experience

Remarks

1 Bachelor‟s degree in mechanical, electrical, chemical, production, electronic, computer, industrial engineering and any other stream of engineering as required by the Banks for conduct of valuation of Plant & Machinery and other equipments

5 years work experience in the field of Valuation of Plant & machinery after Completion of the degree or equivalent

The Applicants with these qualifications should preferably possess an additional qualification in the form of a certification examination of duration of one semester or above on or before 31.12.2019 in the subjects which are vital for valuation of plant & machinery and not covered in course curriculum of mechanical, electrical, electronics, chemical, production, computer, industrial engineering, and any stream of Engineering as required by the Banks for conduct of valuation of Plant & Machinery and other equipments and which is conducted by recognized university established under state or central acts. Note: The applicants empanelled on the basis of criteria laid down under Sr.no.1 shall be eligible for empanelment even after 1.1.2020.

2 Diploma in mechanical, electrical, production, Chemical, electronic, computer, industrial engineering and any other stream of engineering as required by the Banks for conduct of valuation of Plant & Machinery and other equipments.

8 years work experience in the field of valuation of plant and machinery after completion of the diploma

They should preferably complete course in valuation of plant & machinery as prescribed under Sr.no.1 above. Note: The applicants empanelled on the basis of criteria laid down under Sr.no.2 shall be eligible for empanelment even after 01.01.2020.


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(*present guidelines to continue till further instructions from IBA)

4.3.1.3 Valuers of Agricultural land

4.3.1.3.1 There is no Act to regulate profession of valuation of agricultural land.

4.3.1.3.2 As there are no courses available in our country, at present to qualify as a valuer of agricultural land, the Valuer of agricultural land ought to have knowledge of following principles of valuation -

i. Cost, price, value and worth

ii. Various types of value

iii. Value elements – ingredients – characteristics

iv. Annuities – capitalization – rate of capitalization – redemption of capital

v. Three approaches to value viz. Income, Market and cost

vi. Laws applicable to agricultural land

4.3.1.3.3 Till the courses are available the empanelment may be carried out as per

criteria laid down under the Wealth Tax Rule 8A (3):

A Valuer of agricultural lands (Other than plantations referred to in sub-rule (4) shall have the following qualifications, namely :- i. He/she must be a graduate in agricultural science of a recognised university and must have worked as a farm valuer for a period of not less than five years;

or

ii. He/she must be a person formerly employed in a post under Government as Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank

3 Master‟s degree in Valuation of plant & machinery awarded by a recognized University in India i.e. University established under State or Central Act

2 years work experience in the field of valuation of plant & machinery after completing the examination

-


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performing similar functions and must have retired or resigned from such employment after having rendered service in any one or more of the posts aforesaid for an aggregate period of not less than five years.

4.3.1.4 Valuers of Agricultural Land (Plantations) under Wealth Tax Rule 8A(4) - A valuer of coffee plantation, tea plantation, rubber plantation, cardamom plantation or, as the case may be, shall have the following qualifications, namely :-

i. He/she must have, for a period of not less than five years, owned, or

acted as manager of a coffee, tea, rubber, cardamom plantation or, as the case may be, having an area under plantation of not less than four hectares in the case of a cardamom plantation or forty hectares in the case of any other plantation; or

ii. He/she must be a person formerly employed in a post under Government

as a Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank performing similar functions and must have retired or resigned from such employment after having rendered service in any one or more of the posts aforesaid for an aggregate period of not less than five years, out of which not less than three years must have been in areas, wherein coffee, tea, rubber, cardamom or, as the case may be is extensively grown.

4.3.1.5 Valuers of Stock (Inventory), Shares 4.3.1.5.1 In the case of these assets criteria laid down under the Wealth Tax Rule 8A

(7) shall be adopted. A Valuer of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill but excluding those referred to in sub-rules (2) to (6) and (8) to (11), shall have the following qualifications, namely, i. He/she must be a member of the Institute of Chartered Accountants of

India or the Institute of Cost and Works Accountants of India [or the Institute of Company Secretary of India]; and

ii. He/she must have been practicing as chartered accountant or a cost and

works accountants or a company secretary for a period of not less than ten years and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years.


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4.3.2 Proof of Experience

4.3.2.1 Valuers need to furnish proof of experience. Any one of the following may be accepted as proof of experience:

i. Letter of empanelment by any Bank / FI

ii. Letter of empanelment by any Court of India

iii. Registration Certificate under Wealth Tax Act, 1957

iv. Letter of appointment as valuation consultant by Government of India /

any State Government / any Municipality / any Municipal Corporation

v. Letter of appointment as valuer employee by Government of India / any State Government / any Municipality / any Municipal Corporation

vi. Letter of appointment as a valuer employee by any Limited Company engaged in the business of valuation

vii. Letter of appointment as a valuation consultant by any Limited Company.

viii. Letter of appointment as a valuer employee by any partnership / proprietorship / private limited Company engaged in the business of valuation for the last five years.

4.3.2.2 The Experience of the Valuer is to be calculated from the date of his first empanelment with any Bank / Financial Institution / High Court or registration under Wealth Tax Act, 1957.

4.3.2.3 The valuer should have at least 2 years of experience in Public Sector Banks.

4.4 Minimum Age Requirement

4.4.1 The minimum age for empanelment shall be 25 years and there is no maximum age limit for a valuer to remain on the panel.

4.5 Membership of Professional Bodies:

4.5.1 It is important that a valuer actively participates in professional activities in various professional bodies.

4.5.2 It shall be necessary that every valuer empanelled by the Bank be a member in good standing of any one of the valuer associations.


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4.6 Categories of Valuers 4.6.1 Categorization of valuers is made to ensure that lesser value assignments are

handled by relatively junior valuers and senior valuers handle higher order valuations. Hence, empanelment of valuers therefore shall be in the following categories:

Sl. No.

Category of Valuers

Work Experience / Qualification in

Undertaking Valuation

Value of property for assignment of Valuation

Work

1. A More than 10 years No limit

2. B More than 5 years and upto 10 years

Upto Rs.50 crore

3. C Upto 5 years Upto Rs.5 crore

4. D Diploma holders in engineering / architecture

Upto Rs.1.00 crore

4.6.2 For IBBI registered valuers, category A will be applicable irrespective of work

experience.

4.7 Registration with Government

4.7.1 Registration with the Central / State Governments is desirable but not compulsory. However, for undertaking valuations under the SARFAESI Act, valuation has to be obtained from Registered Valuer under the Wealth Tax Act (Sections 34 AA to 34 AE).

4.7.2 While assigning / outsourcing valuation work to valuers, it is necessary that provisions of SARFAESI Act are to be taken into account and compliance is made accordingly. The subject policy is approved by the Board of the Bank and the committee to empanel as given in para 8 is hereby authorized by the Board of Directors to exercise the power conferred to it by the Board. The valuers empanelled by the Committee shall be deemed as Board approved valuers and sufficient compliance under The Security Interest (Enforcement) Rules 2002.

Additionally, the list of valuers empanelled by this committee will be quarterly placed to Board for information, as compliance to “The Security Interest (Enforcement) Rules 2002”.

4.7.3 Though the Registered Valuer as per Companies (Registered Valuers and Valuation) Rules, 2017 with IBBI will be eligible for empanelment of valuers as already spelt out in policy, IBA‟s existing guidelines(i.e part I of the policy)shall continue to be applicable for valutions which are not


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mandatorily required to be done under Companies Act, 2013.In times to come it should be endeavor of the valuer to get themselves registered with IBBI as per provision of the Companies (Registered Valuers and Valuation) Rules, 2017.

4.8 References

4.8.1 Carrying out a reference check is extremely important in order to verify the competence of a valuer.

4.8.2 Valuer need to submit at least 3 reference letters and quality of services

provided by the valuer in the previous instances is to be verified before empanelling the valuer on the panel.

4.8.3 The referees shall be either (i) bank manager/s where previously the valuer

had done valuations or (ii) companies for whom the valuer had previously done valuations.

4.8.4 The reference letter shall be on the letter head of the Bank / Financial

Company / any other company where valuations have been done and shall be duly signed by a Branch Head or Senior level Manager / Officer duly indicating the number of years the valuer is rendering the services to that institution.

4.9 Compliance of Standards and Procedures/Methodologies

4.9.1 All valuers empanelled with the Bank shall comply and abide by the

standards and procedures laid down in the policy. Code of Conduct for the valuer is enclosed as per Annexure-III and valuers shall undertake compliance of the same at the time of empanelment. The format of Undertaking is enclosed as per Annexure-IV.

4.9.2 While conducting a valuation, valuers has to comply with Internationally Accepted Valuation Standards (IVS) as applicable to the respective class of asset and respective method of valuation as required. The brief background of IVS is as follows:

4.9.3 The International Valuation Standards (IVS) are standards for undertaking

valuation assignments using generally recognised concepts and principles that promote transparency and consistency in valuation practice. The International Valuation Standards Council (IVSC) is an independent, not-for-profit organization committed to advancing quality in the valuation profession and formation of IVS. Their primary objective is to build confidence and public trust in valuation by producing standards and securing their universal adoption and implementation for the valuation of assets across the world. Valuations are widely used and relied upon in financial and other markets, whether for inclusion in financial statements, for regulatory


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compliance or to support secured lending and transactional activity. The IVSC also promotes leading practice approaches for the conduct and competency of professional valuers.

4.9.4 The IVSC Standards Board is the body responsible for setting the IVS. The

Board has autonomy in the development of its agenda and approval of its publications. In developing the IVS, the Board:

i. follows established due process in the development of any new standard,

including consultation with stakeholders (valuers, users of valuation services, regulators, valuation professional organisations, etc) and public exposure of all new standards or material alterations to existing standards,

ii. liaises with other bodies that have a standard-setting function in the

financial markets,

iii. conducts outreach activities including round-table discussions with invited constituents and targeted discussions with specific users or user groups. The objective of the IVS is to increase the confidence and trust of users of valuation services by establishing transparent and consistent valuation practices. A standard will do one or more of the following:

iv. identify or develop globally accepted principles and definitions,

v. identify and promulgate considerations for the undertaking of valuation

assignments and the reporting of valuations,

vi. identify specific matters that require consideration and methods commonly used for valuing different types of assets or liabilities. International Valuation Standards

4.9.5 The IVS consist of mandatory requirements that must be followed in order to state that a valuation was performed in compliance with the IVS. Certain aspects of the standards do not direct or mandate any particular course of action, but provide fundamental principles and concepts that must be considered in undertaking a valuation. The IVS are arranged as follows:

i. The IVS Framework -This serves as a preamble to the IVS. The IVS

Framework consists of general principles for valuers following the IVS regarding objectivity, judgement, competence and acceptable departures from the IVS.

ii. IVS General Standards - These set forth requirements for the conduct of all valuation assignments including establishing the terms of a valuation engagement, bases of value, valuation approaches and methods, and


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reporting. They are designed to be applicable to valuations of all types of assets and for any valuation purpose.

iii. IVS Asset Standards - The Asset Standards include requirements related to

specific types of assets. These requirements must be followed in conjunction with the General Standards when performing a valuation of a specific asset type. The Asset Standards include certain background information on the characteristics of each asset type that influence value and additional asset-specific requirements on common valuation approaches and methods used.

4.9.6 The comprehensive document on international valuation standard is

available on the IVSC website at www.ivsc.org. The copy of same is also provided on Bank‟s intranet site UBINET as under – UBINET – Credit Policy – Credit Policies – International Valuation Standards

4.9.7 It is expected that every empanelled valuer are made aware of the IVS

guidelines and adherence to the same is done by valuer in valuation process. A declaration to the same is already incorporated in Annexure II.

4.10 Obligations of the Bank: All Branches / Offices has comply with the

following obligations: 4.10.1 All appointments / empanelments of valuers is to be done in accordance

with the provisions of this policy and its amendments from time to time. 4.10.2 All instructions to the valuer to be given by the Branches / Offices in writing. 4.10.3 Supportive documents, wherever possible, is to be provided to the valuer

before the valuation work begins. If any other document is to be procured by the valuer, sufficient time for the same is to be provided and reasonable cost of procurement of such documents is to be reimbursed by the Bank.

4.10.4 A maximum of 10 days time shall normally be given to the valuer to carry out

the valuation. Maximum time for valuation will be mutually decided by the Valuer and Branch depending upon the nature of the valuation job and circumstances on a case to case basis. In case of outstation properties or in case of large property valuations, more time may be given, depending on the circumstances, on a case to case basis.

4.10.5 No security deposits or any other indemnity money is to be taken from the

valuers as security for the professional services that they provide. 4.10.6 Professional fees / payments to the valuers is to be normally paid by the

Branch within 45 days of the submission of the valuation.


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4.10.7 In case the valuation report submitted by the valuer is not “in order,” the Branch shall bring the same to the notice of the valuer within 15 days of submission for rectification and resubmission. In case no such communication is received, it may be presumed that the valuation report has been accepted by Branch. Here “in order” means the adherence to the prescribed format of submission of the respective valuation report only and not the veracity of the content of the report.

4.10.8 In case of valuations under SARFAESI Act, provisions under the Act have to be

followed. 4.10.9 In case discrepancy is noticed in a valuation or between 2 valuations, then,

another valuer, preferably a senior valuer in the A category, may also be appointed by the Bank for fresh valuation as a prudent measure on case to case basis.

4.11 Empanelment Procedure

4.11.1 All applications from intending valuers seeking empanelment should be received in the prescribed format as per Annexure V addressed to Regional Office (RO).

4.11.2 The application format is to be made available on the Bank‟s website in downloadable form.

4.11.3 The empanelment process is to be conducted normally on annual basis. The exercise of empanelment / re-empanelment of eligible new / existing valuers is normally to be undertaken in one lot and not on piece-meal basis. Once empanelled, the valuer shall be on the Bank‟s panel for a period of three years unless and until removed from the panel.

4.11.4 Regional Office to ensure compliance of the following while scrutinizing the application of the valuer:

4.11.4.1 Scrutiny of application received from the eligible applicant strictly in terms of prescribed criteria.

4.11.4.2 Obtaining undertaking from the valuer as per Annexure IV along with the application.

4.11.4.3 Obtaining Credit Information forms from the valuers for preparation and holding on record Credit Reports on them. While recommending the name for empanelment, Regional Offices must furnish their specific comments on the credit report so compiled.


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4.11.4.4 Evidence of previous experience and qualification etc. to be obtained from the valuer. (In case of companies / partnership firms undertaking valuations, the qualification and experience shall apply to the lead valuers of the company / all partners of the partnership firm.)

4.11.4.5 All the documents submitted by applicants should be verified with originals by Regional Offices and a stamp stating “Verified with Original” should be affixed on these documents.

4.11.4.6 Obtaining reports from other Banks / Financial Institutions, with which the valuers are presently empanelled, which should make satisfactory readings.

4.11.4.7 As empanelled valuers will be conducting valuation for accounts eligible for

SARFAESI, Valuer should be registered under the Wealth Tax Act (Sections 34 AA to 34 AE).

4.11.4.8 The applicant should be tax – payer diligently filing income tax returns for

the past three years.

4.11.4.9 The valuers should not have been delisted by our Bank /IBA/any Statutory Authority (IBBI etc) for unfair practice in the past. To ensure that the applicant valuer, being recommended for empanelment is not delisted by any Bank in the past, Regional Offices to gather the aforesaid information from the IBA‟s Caution list of Third Party Entities (TPEs) before recommending any names. This aspects needs to be specifically confirmed by them under column 11 of Format F.

4.11.5 If the valuer is found to meet the eligibility criteria for empanelment, the application may be forwarded to the CP&MSME Department, Central Office along with the recommendations of the Regional Head in prescribed Format –F (Annexure-VI) for approval. However, Regional Office, based on their geographical spread and other relevant factors, shall decide the number of valuers required to be empanelled for their Region.

4.11.6 On receipt of the application at CP&MSME Department, Central Office, the application of the valuer is to be scrutinized again and if found suitable the concerned Regional Office is to be advised the empanelment of approved valuers.

4.11.7 On empanelment of new valuers, the respective Regional Offices shall undertake following compliance:

4.11.7.1 Conveying approval of empanelment with the Bank to the respective valuer 4.11.7.2 Obtaining two passport size photographs of the applicant.


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4.11.7.3 Obtaining Indemnity Letter from the valuers, if there is no objection from them as per the enclosed Format – G. (Annexure-VII)

4.11.7.4 While conveying the empanelment to valuers, it must necessarily be made

clear to valuer that their empanelment does not guarantee regular valuation assignment and that it does not tantamount to Contract of Employment with the Bank.

4.11.7.5 Circulation to all the branches under their geographical jurisdiction

(including Industrial Finance Branches (IFBs) & DGM-Headed Branches, if any) the particulars of valuers like their names, addresses, telephone numbers etc., along with photographs and specimen signatures.

4.11.7.6 Necessarily maintain and regularly update a register of „Approved List of

Valuers‟ as per annexure-VIII based on Empanelment / Re-empanelment / De-listing conveyed to them by the Central Office from time to time as per prescribed Format.

4.11.7.7 Regional office should ensure that there should be equitable distribution of

work amongst empanelled valuers based upon their past performance.

4.11.7.8 All empanelled valuer will be allotted a Unique Identification Number in consonance with the system/software integration with Lending Automated Solution(LAS). On depanelment of the valuers the name should be deleted from LAS database immediately.

4.12 Duration of Empanelment

4.12.1 The duration of empanelment will be for a period of three years and

approval of re-empanelment is to be obtained thereafter from the Central Office.

4.12.2 Existing valuers in the panel who are not having registration under Wealth

Tax Act, shall continue till their tenure of empanelment. Regional Office to advise all such valuers to get themselves registered under Section 34 AB of Wealth Tax Act, 1957 for consideration of re-empanelment in the Bank.

4.12.3 However, the quality of service provided / performance of the valuers shall be reviewed annually by the Bank. The format for annual review to be done by respective ROs is attached as Annexure-XII.

4.13 Payment of Professional Fees

4.13.1 The fee structure, as per Annexure – IX, represents the maximum amount of

fee that can be paid to the valuers and should be subject to negotiation at


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the time of giving each assignment. Special care needs to be taken while negotiating fees for revaluation of the assets already mortgaged to Bank.

4.13.2 Branches should make payment of fees to valuers to the debit of client‟s

account only.

4.13.3 However in case of NPA accounts fee payable to valuers would be recovered from the miscellaneous expenses and recorded in the file of NPA accounts, to be recovered in accordance with Bank guidelines on appropriation of recoveries.

5. Resolution of Conflict

5.1 There are possibilities of conflicts with valuers empanelled by the Bank.

5.2 Hence, Committee headed by GM shall be formed for addressing all conflicts

and arriving at an amicable solution.

5.3 Committee may take an opinion of independent reputed valuers in the panel of the Bank or appoint representative from professional Valuer Association / independent reputable valuers in the committee for resolution of conflict, if any.

6. Removal/De-listing of Valuers from Bank’s Panel

6.1 If the performance of the valuer is not satisfactory, the valuer can be removed from the Panel at the discretion of the Bank.

6.1.1 There is a prescribed process for removal of valuers from the Bank‟s panel as given in subsequent paragraphs. However, in view of the long drawn process the name of respective valuer being considered for removal delisting may be kept in a “ABEYANCE” i.e. no further assignments to be given to them. Such list can be maintained at respective Regional Offices / Mid-Corporate Branches / IFBs with information to CP&MSME Department.

6.2 Further, it will be the duty of Regional Office (In case of MCB/IFBs, respective Branch Heads) to immediately bring it to the notice of Credit Policy & MSME Department, Central Office, any non adherence to the code of conduct prescribed for valuer (as given in Annexure III) by any of the Empanelled valuer, in order to enable immediate de-listing of such valuer. The reporting for delisting of empanelled valuer should be made in the enclosed Format – H. (Annexure-X)

6.3 In case removal of valuer on account of unfair practice, with the permission of Committee headed by GM, IBA should be informed to place the subject name in the IBA‟s Caution list of Third Party Entities (TPEs) by CP&MSME Department. In cases of


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frauds as informed by Branches / Offices / Risk Management Department (RMD), CP&MSME Department after taking permission from Committee of GMs will recommend these names to RMD, Central Office (convener of Empowered Forum) as per format in Annexure-XI. Empowered Forum (Committee under RMD) shall examine the role of TPE in fraud and decide whether the TPE shall be put on the Caution list.

6.4 IBA should be informed by RMD to place the subject name in the IBA‟s Caution list of Third Party Entities (TPEs) involved in Fraud. In case, name of valuer in panel of our Bank appears in IBA‟s Caution list of Third Party Entities (TPEs) involved in Fraud, the subject valuer will be delisted from our Bank and aforesaid information as provided by IBA will be circulated accordingly.

6.5 However, before reporting the name of the valuer, it should be ensured that the procedures laid down by IBA in its procedural guidelines are scrupulously followed. The steps involved in the process is given hereunder:

6.5.1 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

6.5.2 Hearing: The valuer shall be given an opportunity to be heard so that his / her point of view is made known.

6.5.3 Deliberation: The matter shall be deliberated by the Empowered Forum / Committee headed by GM. In case the competent authority opines that the charges against the valuer are serious, the valuer may be removed from the panel.

6.6 The Committee may also consider imposition of suitable fines depending on

severity of the case against the valuer for continuation of empanelment with the Bank.

7. Re-Empanelment

7.1 Valuers once removed from the panel of the Bank could be re-empanelled

again after a specified period, based on the recommendations of the Committee of GMs.

8. Delegation

8.1 The responsibility of Empanelment/Re-empanelment of the valuers,/

Removal of valuers/Resolution of conflict with valuers/Annual Review of performance of valuers is vested with Committee headed by GM.

8.2 The members of the Committee headed by GM would be as under:


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i) General Manager / Head – CP & MSME - Chairperson ii) General Manager / Head – LCV iii) General Manager / Head – Legal Services Department (In his absence GM

/ Head, Credit Recovery) iv) Deputy General Manager – LCV v) Deputy General Manager – CP & MSME

8.3 The Quorum for this committee would be minimum 3, where presence of GM

/ Head (CP&MSME) and GM / Head – Legal Services (In his absence GM / Head, Credit Recovery) is mandatory and the Convenor would be AGM/DGM (CP&MSME).

8.4 However, the authority for considering deviation with respect Empanelment/Re-empanelment in the policy on case to case basis is vested with CAC-I.


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Part II Policy dealing with valuation of properties and empanelment of valuers those

required under Companies Act,2013

9. The Ministry of Corporate Affairs (MCA) has notified the provisions governing valuation by registered valuers [section 247 of the Companies Act, 2013 (the Act)] and the Companies (Registered Valuers and Valuation) Rules, 2017 (the Rules).In addition, to administer and perform functions under the said rules, the MCA by way of notification on 23 October, 2017, has specified the Insolvency and Bankruptcy Board of India (IBBI) as the responsible authority.

10. Section 247 of the Act requires that where a valuation is to be made of any

property, stocks, shares, debentures, securities or goodwill or any assets or net worth of a company or its liabilities under the provisions of the Act, the same shall be valued by a person having the requisite qualifications, experience, registered as a valuer and member of a registered valuers organisation, in the manner prescribed in the Rules.

11. To administer and perform functions under the said rules, the MCA by way of

notification on 23 October, 2017, has specified the Insolvency and Bankruptcy Board of India (IBBI) as the responsible authority.

12. The notified Rules lays down the criteria for individuals, partnership entities

and companies to be eligible to be registered as valuers under the Act. Apart from this, the Rules contain other aspects pertaining to registered valuers and valuation as follows:

i. Process for registration as valuers ii. Recognition of registered valuer organisations iii. Valuation standards iv. Transitional arrangement

13. Currently, the Act requires a valuation report from a registered valuer in

certain cases, such as for further issue of share capital (preferential allotment), non-cash transactions involving directors, compromise and arrangements with creditors and members, purchase of minority shareholding, etc as follows.


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Sections as per Valuation Requirement/ Details Companies Act 2013 Purpose

Sections as per Companies Act 2013

Valuation Requirement/

Purpose

Details

Section 62 (1) (c)

Issue of new

shares

If any company proposes to issue new shares (except a rights issue to existing shareholders or to employees under employees stock options), the price of such shares should be determined by the valuation report of a Registered Valuer.

Section 192 (2) Non cash transaction

with directors

In case of sale or purchase of any asset involving a company and the directors of the company (or its holding, subsidiary or associate company) or a person connected with the Director for consideration other than cash, the value of the assets has to be calculated by a Registered Valuer.

Section 230 (2) & (3) and Section 232

Compromises, Arrangements

and Amalgamations

- In case of a compromise or arrangement between members (such as in mergers or amalgamations) or with creditors (such as in corporate debt restructuring), a valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered valuer is required.

- In case of mergers, the directors

are also required to circulate a report to members specifying, inter alia, any special valuation difficulties.

Section 236 Purchase of minority share

holding

In case an acquirer or person acting in concert with the acquirer acquire 90% or more of the equity capital in a company, they can offer to the


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minority shareholder (or the minority shareholder can offer to the acquirer) to acquire the minority shareholding at a valuation determined by the Registered Valuer.

Section 281(1) (a) and Section 305 (2) (d)

Winding up of a company

A valuation of assets of the company prepared by the Registered Valuers is required in case of winding up, voluntarily or otherwise.

14. Eligibility, qualifications and registration of valuers in Brief

i. Any person, partnership entities (includes limited liability partnerships) are eligible to be registered valuers, provided they meet the eligibility conditions

prescribed in the rules. In case of partnership entities or companies, in order to be eligible as registered valuers (apart from other conditions), it is necessary that the entity is formed for rendering professional or financial services including valuation and at least three or all the partners or directors (whichever is lower), are registered valuers

ii. Qualifications and experience requirements have been prescribed for

individuals, to be eligible for registration as valuers. Further, an indicative matrix on requisite qualifications/ experience in specified discipline for asset classes has been provided in the rules.

a. To test professional knowledge, skills, values and ethics in valuation, IBBI to

either on its own, or through a designated agency, conduct examinations for one or more asset classes, for individuals (who possess the qualifications and experience as specified) and have completed their educational courses as member of a registered valuers organisation.

b. Until the Central Government notifies the Indian valuation standards, the

registered valuer shall make valuation as per - 1) internationally accepted valuation methods; 2) valuation standards adopted by a registered valuers organisation.

c. The Central Government may constitute a committee to be known as

“committee to advise on valuation matters” to make recommendations on formulation and laying down of Indian valuation standards and policies for compliance by companies and registered valuers.

iii. The notified Rules attempt to bring in standardisation in the valuation

standards in India and ensure that valuation reports disclose a true and fair view and result in greater objectivity in valuation procedures. The increased


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transparency and fairness in the valuation system would also boost stakeholder confidence by bringing uniformity.

15. Conduct of Valuation ─ The registered valuer shall, while conducting a valuation, comply with the valuation standards as notified or modified under rule 18 of Companies (Registered Valuer and Valuation) Rules 2017:

i. Provided that until the valuation standards are notified or modified by the

Central Government, a valuer shall make valuations as per-

(a) Internationally Accepted Valuation Standards (please refer point 4.9 of the policy for details); (b) valuation standards adopted by any registered valuers organisation.

16. The valuation required as above and empanelment of valuers for such

valuation should be done as per the procedure defined under Companies (Registered Valuers and Valuation) Rules 2017. Appointment of the valuer is to be done as per the rule prescribed in Companies Registered Valuer and Valuation Rules 2017. For all registered valuers of IBBI, the empanelment process is already defined in para no.4.1.


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Part III

17. Other Matters: 17.1 Engagement of Valuers for valuation of security in cases referred to NCLT as

per provisions of Insolvency and Bankruptcy Code 2016 (IBC) – 17.2 For cases referred to NCLT under IBC, IRP/RP shall appoint valuers for

valuation of assets of the corporate debtor by engaging valuers who are registered with IBBI/organizations recognized by IBBI. The scope and fees payable to such valuers shall be fixed by the IRP / RP with approval of Committee of Creditors (CoC).

17.3 Generally, respective Regional Offices and their Branches will utilize the

services of valuers from the panel meant for their Region by allocating the assignment to a specific valuer. However for certain specific reasons like non availability of valuers /distance of the property from the branch, Branch Head may approach Regional Office for utilizing the services of other valuers from the Panel meant for other Regions for which the permission will be granted by Regional Head. In case of Large Corporate Branches & Mid Corporate Branches accounts no permission is needed from Regional Office utilizing the services of other valuers from the Panel meant for other Regions.

17.4 It has been observed that in some NPA accounts periodical valuation of

properties available as secured assets with the Bank, in the names of borrowers and/or guarantors is not got done, in terms of the current policy. It is imperative to note that such lapses have adverse bearing on Bank‟s performance parameters e.g profitability, Capital to Risk Weighted Asset Ratio (CRAR) etc. In absence of correct valuation of property, the provisioning in NPA accounts as per RBI norms, cannot be computed correctly. Thus, it is clarified that, the criteria for valuation of properties (both borrower‟s and/or guarantors) in existing accounts, also hold good for NPA accounts except where OTS /Sale to ARCs proposals/Sale under SARFAESI Act are under consideration/processing.

18. Ownership 18.1 CP & MSME Department, Central Office shall frame, design/review/fine

tune/modify policies/procedures in relation to valuation of properties (Excluding valuation of Fixed Assets owned by the Bank) and empanelment of valuer in the Bank, with the approval of Board of Directors.

18.2 The nodal officer of the Bank for all valuation related matter for coordination internally as well as with the IBA will be General Manager, CP&MSME Department, Central Office.


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19. Compliance

19.1 All the functional divisions are expected to comply with the policy guidelines laid down in this Policy document. In case of any doubt about the applicability of any aspect of the policy contents, clarification/approval shall be sought from CP&MSME Department, Central Office.

20. Modification and Review

20.1 The Policy shall also be modified to give effect, in case of any changes in the

existing guidelines/directives/instructions based on the directives/advice of Reserve Bank of India/Govt. of India/other regulatory authorities, issued from time to time, subject to reporting and approval of the Board of Directors. This policy has been made in compliance with all extant regulatory guidelines issued till date.

20.2 However, formulation and updating of valuation related formats is to be

done by CP&MSME Department subject to scrutiny by RMD.

20.3 The policy is equally applicable for existing as well as new valuers in the panel of the Bank. Acceptability of the valuers as per prescribed criteria shall be reviewed at the time of annual performance review/empanelment or re-empanelment process.

20.4 The guidelines enumerated in the policy are applicable for all domestic operations.

20.5 The policy shall be valid upto 31-March-2021 from the date of amalgamation and it should be renewed by the end of March every year. The continuity of the Policy may be extended for a further period of 3 months with the specific approval of MD&CEO.

21. Matters pertaining to amalgamated entity:

21.1 The various nomenclatures used for the sanctioning / reporting authority,

monitoring, compliance, credit approval committees, etc at different levels,

and delegation in the subject policy may undergo changes as the

organizational structure / credit dispensation structure may be revamped for

the amalgamated entity in due course.

21.2 In view of the above, the necessary changes / alignment / rationalization in

the subject policy (mostly operational in nature) will be approved by Credit

Risk Management Committee (CRMC) in line with the amalgamation process,

if required.


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21.3 In order to achieve synergy for empanelment of valuers, and to achieve

seamless business continuity in the matter we propose the following tenure

of empanelment in different scenarios:

Valuers Empanelled position in respective Bank as

on 31.03.2020

Empanelment

validity

Union Bank of

India

Andhra Bank Corporation

Bank

Scenario 1 Yes Yes Yes Tenure of appointment in Union Bank of India or 31.03.2021, whichever is later.

Scenario 2 Yes No No

Scenario 3 No Yes Yes Tenure of

appointment in

respective Banks

or 31.03.2021,

whichever is

later.

Scenario 4 No Yes No

21.4 The valuers pertaining to Andhra Bank / Corporation Bank interested to

continue beyond 31st March 2021 or tenure of appointment (as explained

above) in the amalgamated entity need to apply afresh for empanelment in

the amalgamated entity and their appointment will be in compliance with

this subject policy.

21.5 For all valuation assignments carried from 1st April 2020, the guidelines as

per this policy will have to be followed by valuers in the amalgamated

entity.

21.6 Hitherto fees for valuation are being followed by individual banks i.e.

Corporation Bank and Andhra Bank as per their respective fee structure. The

fees structure as given in Annexure-IX which is maximum in nature is to be

followed from 01.04.2020 onwards. However, in case any customer of

erstwhile Corporation Bank / Andhra Bank raises issue on the parity of the

fees, lower fees as hitherto being paid in Corporation Bank / Andhra Bank

may be paid by the customer till 31.03.2021. Going forward, the fees

structure as given in the policy will be followed from 01.04.2021.


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21.7 The operational and related modalities for empanelment of valuers after

amalgamation will be decided by GM / Head (CP&MSME).

21.8 On creation / change in organisational structure of the amalgamated entity,

the allotment of valuation / repository of data for valuation for eligible

assignments need-based revision in the cut-off/authority for empanelment of

valuers for the amalgamated entity may be changed with the approval of

MD&CEO.


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Annexure-I

Format-A (Name & address of the Valuer) TO, UNION BANK OF INDIA BRANCH:

VALUATION REPORT (IN RESPECT OF LAND / SITE AND BUILDING)

(To be filled in by the Approved Valuer)

I. GENERAL

1. Purpose for which the valuation is made

2. a) Date of inspection :

b) Date on which the valuation is made

:

3. List of documents produced for perusal

i) :

ii) :

iii) :

4. Name of the owner(s) and his / their address (es) with Phone no. (details of share of each owner in case of joint ownership)

:

5. Brief description of the property (Including leasehold/freehold etc)

:

6. Location of property

a) Plot No. / Survey No. :

b) Door No. :

c) T. S. No. / Village :

d) Ward / Taluka :

e) Mandal / District :

7. Postal address of the property

8. City / Town :

Residential Area :

Commercial Area :

Industrial Area :

9. Classification of the area :

i) High / Middle / Poor :

ii) Urban / Semi Urban / Rural :

10 Coming under Corporation limit / Village Panchayat / Municipality

:


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11 Whether covered under any State / Central Govt. enactments (e.g. Urban Land Ceiling Act) or notified under agency area / scheduled area / cantonment area

:

12 In case it is an agricultural land, any conversion to house site plots is contemplated

:

13 Boundaries of the property :

North :

South :

East :

West :

14.1 Dimensions of the site : A B

As per the Deed

Actuals

North :

South :

East :

West :

14.2 Latitude, Longitude and Coordinates of the site

:

15 Extent of the site :

16 Extent of the site considered for valuation (least of 14 A & 14 B)

:

17 Whether occupied by the owner / tenant? If occupied by tenant, since how long? Rent received per month.

:

II. CHARACTERISTICS OF THE SITE

1. Classification of locality

2. Development of surrounding areas

3. Possibility of frequent flooding / sub-merging

4. Feasibility to the Civic amenities like school, hospital, bus stop, market etc.

5. Level of land with topographical conditions

6. Shape of land

7. Type of use to which it can be put

8. Any usage restriction

9. Is plot in town planning approved layout?

10 Corner plot or intermittent plot?

11 Road facilities

12 Type of road available at present

13 Width of road – is it below 20 ft. or more than 20 ft.


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14 Is it a land – locked land?

15 Water potentiality

16 Underground sewerage system

17 Is power supply available at the site?

18 Advantage of the site

1.

2.

19 Special remarks, if any, like threat of acquisition of land for public service purposes, road widening or applicability of CRZ provisions etc. (Distance from sea-coast / tidal level must be incorporated)

1.

2.

Part – A (Valuation of land)

1. Size of plot

North & South

East & West

2. Total extent of the plot

3. Prevailing market rate (Along with details /reference of atleast two latest deals/transactions with respect to adjacent properties in the areas)

4. Guideline rate obtained from the Registrar‟s Office (an evidence thereof to be enclosed)

5. Assessed / adopted rate of valuation

6. Estimated value of land

Part – B (Valuation of Building)

1. Technical details of the building

a) Type of Building (Residential / Commercial / Industrial)

b) Type of construction (Load bearing / RCC / Steel Framed)

c) Year of construction

d) Number of floors and height of each floor including basement, if any

e) Plinth area floor-wise

f) Condition of the building

i) Exterior – Excellent, Good, Normal, Poor

ii) Inferior - Excellent, Good, Normal, Poor

g) Date of issue and validity of layout of


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approved map / plan

h) Approved map / plan issuing authority

i) Whether genuineness or authenticity of approved map / plan is verified

YES / NO

j) Any other comments by our empanelled valuers on authentic of approved plan

Specifications of construction (floor-wise) in respect of

S. No.

Description Ground floor

Other floors

1. Foundation

2. Basement

3. Superstructure

4. Joinery / Doors & Windows (please furnish details about size of frames, shutters, glazing, fitting etc. and specify the species of timber)

5. RCC works

6. Plastering

7. Flooring, Skirting, dadoing

8. Special finish as marble, granite, wooden paneling, grills, etc

9. Roofing including weather proof course

10. Drainage

S. No. Description Ground floor Other floors

2. Compound wall :

Height :

Length

Type of construction

3. Electrical installation

Type of wiring :

Class of fittings (superior / ordinary / poor) :

Number of light points :

Fan points :

Spare plug points :

Any other item

4. Plumbing installation

a) No. of water closets and their type :

b) No. of wash basins :

c) No. of urinals :

d) No. of bath tubs :

e) Water meter, taps, etc. :

f) Any other fixtures :


Page 37 of 71

Details of valuation

Sr. no. Particulars of item Plinth area

Roof height

Age of building

Fair Market Value Rs.

Ground floor

First floor

Other floor, if any

Total

Part C- (Extra Items) (Amount in Rs.)

1. Portico :

2. Ornamental front door :

3. Sit out/ Verandah with steel grills

:

4. Overhead water tank :

5. Extra steel/ collapsible gates :

Total :

Part D- (Amenities) (Amount in Rs.)

1. Wardrobes :

2. Glazed tiles :

3. Extra sinks and bath tub :

4. Marble / ceramic tiles flooring :

5. Interior decorations :

6. Architectural elevation works :

7. Paneling works :

8. Aluminum works :

9. Aluminum hand rails :

10. False ceiling :

Total

Part E- (Miscellaneous) (Amount in Rs.)

1. Separate toilet room :

2. Separate lumber room :

3. Separate water tank/ sump :

4. Trees, gardening :

Total


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Part F- (Services) (Amount in Rs.)

1. Water supply arrangements :

2. Drainage arrangements :

3. Compound wall :

4. C. B. deposits, fittings etc. :

5. Pavement :

Total :

Total abstract of the entire property

Part- A Land : Rs.

Part- B Building : Rs.

Part- C Extra Items : Rs.

Part- D Amenities : Rs.

Part- E Miscellaneous : Rs.

Part- F Services : Rs.

Total : Rs.

Say : Rs.

(Valuation: Here the approved valuer should discuss in detail his approach to valuation of property and indicate how the value has been arrived at, supported by necessary calculations. Also, such aspects as i) Salability ii) Likely rental values in future in iii) Any likely income it may generate, may be discussed). Photograph of owner/representative with property in background to be enclosed. Screen shot of longitude/latitude and co-ordinates of property using GPS/Various Apps/Internet sites As a result of my appraisal and analysis, it is my considered opinion that the present fair market value of the above property in the prevailing condition with aforesaid specifications is Rs. _________ (Rupees ______________ only). The book value of the above property as of _______ is Rs. _________ (Rupees ______________________ only), Net Realisable Value is Rs. ____________ (Rupees ______________ only) and the distress value Rs. ____________ (Rupees ______________________ only).


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Place: Date: Signature (Name and Official seal

of the Approved Valuer) The undersigned has inspected the property detailed in the Valuation Report dated _____________ on _____________. We are satisfied that the fair and reasonable market value of the property is Rs. _________ (Rupees ________________ only). Signature

(Name of the Branch Manager with Official seal)

Date: Encl:

1. Declaration from the valuer in Format E (Annexure II of The Policy on Valuation of Properties and Empanelment of Valuers).

2. Model code of conduct for valuer (Annexure III of The Policy on Valuation of Properties and Empanelment of Valuers).


Page 40 of 71

Format-B (Name & address of Valuer) TO, UNION BANK OF INDIA BRANCH:

VALUATION REPORT (IN RESPECT OF AGRICULTURAL LANDS) (To be filled in by the Approved Valuer)

I. GENERAL




:


i) :

ii) :


:

5. Brief description of the property :



b) Door No. :


d) Ward / Taluka :



8. Coming under Corporation limit / Village Panchayat / Municipality

:

9. Whether covered under any State / Central Govt. enactments (e.g. Urban Land Ceiling Act) or notified under agency area / scheduled area / cantonment area

:

10. Is any conversion to house site plots comtemplated?

:

11. Boundaries of the property :

North :

South :

East :

West :


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12. Dimensions of the site : A B

As per the Deed

Actuals

North :

South :

East :

West :


13.a Latitude, Longitude and Coordinates of the site


:

15 Whether occupied by the owner / lessee? If cultivated by lessee, since how long and type of tenancy agreement?

:

16 Income received (per year) : Rs.

II. CHARACTERISTICS OF THE SITE :

1. Whether the land under consideration is suitable for cultivation

:

2. Irrigation facilities – canal / well / bore / rain-fed

:

3. Possibility of frequent flooding / sub-merging

:

4. Level of land with topographical conditions.

:

5. Shape of land :

6. Is it a Land – locked land? :

7. Whether any cottages / buildings exist in the Land?

:

8. Whether fencing and gates are arranged? :

9. General conditions of the land :

10. Quality of soil of the sand :

11. Whether the land is situated on a Main / National Highway Road? If not, distance from the Main / Highway Road.

:

12. Types of crops grown :

13. Water supply & electricity facilities. :

14. Advantage of the site :

1. :

2. :

15. Disadvantages of the land :

1. :

2. :

16. Special remarks, if any, like threat of acquisition of land for public service

:


Page 42 of 71

purposes, road widening or applicability of CRZ provisions etc. (Distance from sea-coast / tidal level must be incorporated)

III. VALUATION OF AGRICULTURAL LAND

1. Size of land :

North & South :

East & West :

2. Total extent of the land

:

3. Prevailing market rate (per acre) (Along with details /reference of atleast two latest deals/transactions with respect to adjacent properties in the areas)

: Rs.

4. Guideline rate obtained from the Registrar‟s Office / Mandal Revenue office (an evidence thereof to be enclosed)

:

5. Assessed / adopted rate of valuation : Rs.

6. Estimated value of land : Rs.

(Valuation: Here, the approved valuer should discuss in detail his approach to valuation of property and indicate how the value has been arrived at, supported by necessary calculations. Also, such aspects as i) Salability ii) likely rental values in future and iii) any likely income it may generate may be discussed).

Photograph of owner/representative with property in background to be enclosed. Screen shot of longitude/latitude and co-ordinates of property using GPS/Various Apps/Internet sites


Page 43 of 71

As a result of my appraisal and analysis, it is my considered opinion that the present fair market value of the above property in the prevailing condition with aforesaid specifications is Rs. _________ (Rupees ______________ only). The book value of the above property as of _______ is Rs. _________ (Rupees ______________________ only), Net Realisable Value is Rs. ____________ (Rupees ______________ only) and the distress value Rs. ____________ (Rupees ______________________ only). Signature (Name and Official Seal of the Approved Valuer) The undersigned has inspected the property detailed in the Valuation Report dated ---------------- on -------------------. We are satisfied that the fair and reasonable market value of the property is Rs. ----------------- (Rupees ------------------------------ only) Signature (Name of the Branch Manager with Office Seal)

Date:

Encl:

1. Declaration from the valuer in Format E (Annexure II of The Policy on Valuation of Properties and Empanelment of Valuers).

2. Model code of conduct for valuer (Annexure III of The Policy on Valuation of Properties and Empanelment of Valuers).


Page 44 of 71

Format-C

(Name & address of the Valuer) TO, UNION BANK OF INDIA BRANCH:

VALUATION REPORT (IN RESPECT OF FLATS) (To be filled in by the Approved Valuer)

I. GENERAL



b) Date on which the valuation is made :


i) :

ii) :

iii) :


:

5. Brief description of the property :



b) Door No. :


d) Ward / Taluka :


f) Date of issue and validity of layout of approved map / plan

g) Approved map / plan issuing authority

h) Whether genuineness or authenticity of approved map / plan is verified

YES / NO

i) Any other comments by our empanelled valuers on authenticity of approved plan


8. City / Town :

Residential Area :

Commercial Area :

Industrial Area :

9. Classification of the area :

i) High / Middle / Poor :


Page 45 of 71



:

11 Whether covered under any State / Central Govt. enactments (e.g. Urban Land Ceiling Act) or notified under agency area / scheduled area / cantonment area

:


North :

South :

East :

West :

13 Dimensions of the site : A B

As per the Deed

Actuals

North :

South :

East :

West :


14.1 Latitude, Longitude & Co-ordinates of flat


:

16 Whether occupied by the owner / tenant? If occupied by tenant, since how long? Rent received per month.

:

II. APARTMENT BUILDING

1. Nature of the Apartment :

2. Location :

T.S.No. :

Block No. :

Ward No. :

Village/ Municipality / Corporation :

Door No., Street or Road (Pin Code) :

3. Description of the locality Residential / Commercial / Mixed

:

4. Year of Construction :

5. Number of Floors :

6. Type of Structure :

7. Number of Dwelling units in the building :

8. Quality of Construction :

9. Appearance of the Building :


Page 46 of 71

10 Maintenance of the Building :

11 Facilities Available :

Lift :

Protected Water Supply :

Underground Sewerage :

Car Parking - Open/ Covered :

Is Compound wall existing? :

Is pavement laid around the Building :

III FLAT :

1 The floor on which the flat is situated :

2 Door No. of the flat :

3 Specifications of the flat :

Roof :

Flooring :

Doors :

Windows :

Fittings :

Finishing :

4 House Tax :

Assessment No. :

Tax paid in the name of :

Tax amount : Rs.

5 Electricity Service Connection no. :

Meter Card is in the name of :

6 How is the maintenance of the flat? :

7 Sale Deed executed in the name of :

8 What is the undivided area of land as per Sale Deed?

:

9 What is the plinth area of the flat? :

10 What is the floor space index (app.) :

11 What is the Carpet Area of the flat? :

12 Is it Posh/ I class / Medium / Ordinary? :

13 Is it being used for Residential or Commercial purpose?

:

14 Is it Owner-occupied or let out? :

15 If rented, what is the monthly rent? :

IV MARKETABILITY

1 How is the marketability? :

2 What are the factors favouring for an extra Potential Value?

:

3 Any negative factors are observed which affect the market value in general?

:

V Rate :


Page 47 of 71

1 After analyzing the comparable sale instances, what is the composite rate for a similar flat with same specifications in the adjoining locality? - (Along with details /reference of atleast two latest deals/transactions with respect to adjacent properties in the areas)

:

2 Assuming it is a new construction, what is the adopted basic composite rate of the flat under valuation after comparing with the specifications and othe factors with the flat under comparison (give details).

:

3 Break - up for the rate :

i) Building + Services :

ii) Land + Others :

4 Guideline rate obtained from the Registrar's office (an evidence thereof to be enclosed)

:

VI COMPOSITE RATE ADOPTED AFTER DEPRECIATION

a. Depreciated building rate :

Replacement cost of flat with Services(v (3)i) : Rs.

Age of the building :

Life of the building estimated :

Depreciation percentage assuming the salvage value as 10%

:

Depreciated Ratio of the building : Rs.

b. Total composite rate arrived for valuation :

Depreciated building rate VI (a) : Rs.

Rate for Land & other V (3)ii : Rs.

Total Composite Rate : Rs.

Details of Valuation:

Sr. No.

Description Qty. Rate per unit Rs.

Estimated Value Rs.

1 Present value of the flat (incl. car parking, if provided)

2 Wardrobes

3 Showcases

4 Kitchen Arrangements

5 Superfine Finish

6 Interior Decorations

7 Electricity deposits / electrical fittings, etc.,

8 Extra collapsible gates / grill works etc.,


Page 48 of 71

9 Potential value, if any

10 Others

Total

(Valuation: Here, the approved valuer should discuss in details his approach to valuation of property and indicate how the value has been arrived at, supported by necessary calculation. Also, such aspects as impending threat of acquisition by government for road widening / public service purposes, sub merging & applicability of CRZ provisions (Distance from sea-coast / tidal level must be incorporated) and their effect on i) salability ii) likely rental value in future and iii) any likely income it may generate may be discussed). Photograph of owner/representative with property in background to be enclosed. Screen shot of longitude/latitude and co-ordinates of property using GPS/Various Apps/Internet sites As a result of my appraisal and analysis, it is my considered opinion that the present fair market value of the above property in the prevailing condition with aforesaid specifications is Rs. _________ (Rupees ______________ only). The book value of the above property as of _______ is Rs. _________ (Rupees ______________________ only), Net Realisable Value is Rs. ____________ (Rupees ______________ only) and the distress value Rs. ____________ (Rupees ______________________ only). Place: Date:

Signature (Name and Official Seal of the Approved Valuer)

The undersigned has inspected the property detailed in the Valuation Report dated

____________ on _______________. We are satisfied that the fair and reasonable

market value of the property is Rs. ____________ ( Rs. _______________________

only).

Date:

Signature (Name of the Branch Manager with office Seal)

Encl: 1. Declaration from the valuer in Format E (Annexure II of The Policy on Valuation

of Properties and Empanelment of Valuers). 2. Model code of conduct for valuer (Annexure III of The Policy on Valuation of

Properties and Empanelment of Valuers).


Page 49 of 71

FORMAT - D

UNION BANK OF INDIA BRANCH: __________

VALUATION REPORT

(IN RESPECT OF LAND / SITE AND BUILDING, AGRICULTURAL LAND AND FLATS OFFERED ONLY AS COLLATERAL SECURITY FOR CREDIT LIMITS UPTO RS. 10.00

LACS.

I. GENERAL


:

2 a) Date of inspection :


:

3 List of documents produced for perusal

:

i) :

ii) :

iii) :

4 Names of the owner(s) and his / their address(es) with Phone no. (details of share of each owner in case of joint ownership)

:

5 Brief description of the property :

6 Location of property :

a) Plot no. / Survey No. :

b) Door No. :

C) T.S. No. / Village :

d) Ward / Taluka :


7 Postal Address of the Property :

8 City / Town :

Residential area :

Commercial area :

Industrial Area :

9 Classification of the area

i) High / Middle / poor :



:

11 Whether covered under any State/ Central Govt. enactments (e.g.,

:


Page 50 of 71

Urban Land Celling Act) or notified under agency area/ scheduled area/ cantonment area.

12 In case it is an agricultural land, any conversion to house site plots is contemplated?

:


North :

South :

East :

West :

14 Extent of the site / building / flat/ agricultural land.

:

15 Whether occupies by the owner / tenant? If occupied by tenant, since how long? Income received per month / per annum.

: Rs.

16 Municipal Valuation for tax purpose (if available)

:

17 Value of property :

18 Built up area of the building / flat / apartment

:

i. Date of issue and validity of layout of approved map / plan

ii. Approved map / plan issuing authority

iii. Whether genuineness or authenticity of approved map / plan is verified

YES / NO

iv. Any other comments by our empanelled valuers on authentic of approved plan

19 Carpet area :

20 Value of built up area (Note: While arriving at the approximate cost of the built up area, the rate of current cost of construction to cubical contents of the building may be taken into consideration).

:

21 Please state the nature of construction viz. whether it is built up with RCC or stones and bricks. Please also give some idea about the kind of fittings used in

:


Page 51 of 71

the building, whether flooring is of ordinary kind or whether there are any special or costly fittings. Also whether there is independent water supply, other amenities etc.

22 Year in which the property was constructed

:

23 Total value of the property

i) Value of land : Rs.

ii) Value of built up area : Rs.

24 From the above, please deduct depreciation (it should be arrived at after taking into account the age and life of the building)

: Rs.

25 Value of the property (23-24)

:

26 Special remarks, if any, like threat of acquisition of land for public service purposes, road widening or applicability of CRZ provisions etc (Distance from sea- coast /tidal level must be incorporated)

:

The undersigned has inspected the property on _____________. The fair and reasonable market value of the property described above is Rs. ______ (Rs. ________________________) and the net realizable value is Rs. ______ (Rs. ________________________). Signature

(Name of the Branch Manager With Office Seal)

Date:


Page 52 of 71

Format - D1 (Name & Address of Valuer)

VALUATION REPORT (IN RESPECT OF PLANT & MACHINERY)

NAME OF ACCOUNT _________________, _____________________ BRANCH

(To be filled in by the Approved Valuer)

GENERAL

1. Location of factory/ works/ premises


3. Date of inspection

4. Basis of valuation/ assumptions made

a) Indigenous machines

b) Imported machines

5. Details of the charges created on the assets

Sr. No

Description of

Machinery

Name of Manufacturer/

Supplier

Sr. No. of Machine/

Model No./

Identification

Mark)

Year of

Make

Condition of the

Machine/ Maintena

nce (New/ Old/

Reconditioned)

Quantity

Technical specificat

ion of machine

viz 1. Tag No. 2. Capacity 3. RPM etc

Residual life of

the machin

e

Purchase

Value

Fair market value

WDV as of 31.03…

.

Distress

Value

Net Realisa

ble Value

1. Main Plant


Page 53 of 71

& Machinery

2. Utilities & Services (including pipe fittings & insulations etc)

3. Fixtures, Tools & other instruments

4. Other Miscellaneous Fixed Assets

Remarks, if any: Photograph of owner/representative with machines to be enclosed. Undertakings: 1. This is to certify that the fair market value of the assets (Plant & Machinery) of manufacturing unit of M/s. …………….. Address ………………. as per our detailed appraisal and analysis is amounting to Rs ……… (In words and figures). This should be considered as true and fair.


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2. The information given in this report is correct & true and I have no direct or indirect interest in the assets valued. 3. I have personally inspected the unit on …… (Date) 4. All the above machines are installed at the unit and found to be in working / running condition. I have exercised due diligence in furnishing the above information. Date: Place:

Signature (Name and Official seal of the approved Valuer)

Encl:

1. Declaration from the valuer in Format E (Annexure II of The Policy on Valuation of Properties and Empanelment of Valuers). 2. Model code of conduct for valuer (Annexure III of The Policy on Valuation of Properties and Empanelment of Valuers).

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Annexure-II

Format - E DECLARATION FROM VALUERS

I hereby declare that- a. The information furnished in my valuation report dated ----------------- is true

and correct to the best of my knowledge and belief and I have made an impartial and true valuation of the property.

b. I have no direct or indirect interest in the property valued;

c. I have personally inspected the property on -------------------------- The work is not sub-contracted to any other valuer and carried out by myself.

d. I have not been convicted of any offence and sentenced to a term of Imprisonment;

e. I have not been found guilty of misconduct in my professional capacity.

f. I have read the Handbook on Policy, Standards and procedure for Real Estate Valuation, 2011 of the IBA and this report is in conformity to the “Standards” enshrined for valuation in the Part-B of the above handbook to the best of my ability.

g. I have read the International Valuation Standards (IVS) and the report submitted to the Bank for the respective asset class is in conformity to the “Standards” as enshrined for valuation in the IVS in “General Standards” and “Asset Standards” as applicable.

h. I abide by the Model Code of Conduct for empanelment of valuer in the Bank. (Annexure III- A signed copy of same to be taken and kept along with this declaration)

i. I am registered under Section 34 AB of the Wealth Tax Act, 1957.

j. I am the proprietor / partner / authorized official of the firm / company, who is competent to sign this valuation report.

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k. Further, I hereby provide the following information.

Sl No. Particulars Valuer comment

1 background information of the asset being valued;

2 purpose of valuation and appointing authority

3 identity of the valuer and any other experts involved in the valuation;

4 disclosure of valuer interest or conflict, if any;

5 date of appointment, valuation date and date of report;

6 inspections and/or investigations undertaken;

7 nature and sources of the information used or relied upon;

8 procedures adopted in carrying out the valuation and valuation standards followed;

9 restrictions on use of the report, if any;

10 major factors that were taken into account during the valuation;

11 major factors that were taken into account during the valuation;

12 Caveats, limitations and disclaimers to the extent they explain or elucidate the limitations faced by valuer, which shall not be for the purpose of limiting his responsibility for the valuation report.

Date: Place: Signature

(Name of the Approved Valuer and Seal of the Firm / Company)

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ANNEXURE – III

MODEL CODE OF CONDUCT FOR VALUERS

{Adopted in line with Companies (Registered Valuers and Valuation Rules, 2017)} All valuers empanelled with bank shall strictly adhere to the following code of conduct: Integrity and Fairness 1. A valuer shall, in the conduct of his/its business, follow high standards of integrity and fairness in all his/its dealings with his/its clients and other valuers. 2. A valuer shall maintain integrity by being honest, straightforward, and forthright in all professional relationships. 3. A valuer shall endeavour to ensure that he/it provides true and adequate information and shall not misrepresent any facts or situations. 4. A valuer shall refrain from being involved in any action that would bring disrepute to the profession. 5 A valuer shall keep public interest foremost while delivering his services. Professional Competence and Due Care 6. A valuer shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment. 7. A valuer shall carry out professional services in accordance with the relevant technical and professional standards that may be specified from time to time 8. A valuer shall continuously maintain professional knowledge and skill to provide competent professional service based on up-to-date developments in practice, prevailing regulations/guidelines and techniques. 9. In the preparation of a valuation report, the valuer shall not disclaim liability for his/its expertise or deny his/its duty of care, except to the extent that the assumptions are based on statements of fact provided by the company or its auditors or consultants or information available in public domain and not generated by the valuer. 10. A valuer shall not carry out any instruction of the client in so far as they are incompatible with the requirements of integrity, objectivity and independence.

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11. A valuer shall clearly state to his client the services that he would be competent to provide and the services for which he would be relying on other valuers or professionals or for which the client can have a separate arrangement with other valuers. Independence and Disclosure of Interest 12. A valuer shall act with objectivity in his/its professional dealings by ensuring that his/its decisions are made without the presence of any bias, conflict of interest, coercion, or undue influence of any party, whether directly connected to the valuation assignment or not. 13. A valuer shall not take up an assignment if he/it or any of his/its relatives or associates is not independent in terms of association to the company. 14. A valuer shall maintain complete independence in his/its professional relationships and shall conduct the valuation independent of external influences. 15. A valuer shall wherever necessary disclose to the clients, possible sources of conflicts of duties and interests, while providing unbiased services. 16. A valuer shall not deal in securities of any subject company after any time when he/it first becomes aware of the possibility of his/its association with the valuation, and in accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 or till the time the valuation report becomes public, whichever is earlier. 17. A valuer shall not indulge in “mandate snatching (to undertake assignments for valuation of a particular movable / immovable assets using unscrupulous means)” or offering “convenience valuations” in order to cater to a company or client‟s needs. 18. As an independent valuer, the valuer shall not charge success fee (Success fees may be defined as a compensation / incentive paid to any third party for successful closure of transaction. In this case, approval of credit proposals). 19. In any fairness opinion or independent expert opinion submitted by a valuer, if there has been a prior engagement in an unconnected transaction, the valuer shall declare the association with the company during the last five years. Confidentiality 20. A valuer shall not use or divulge to other clients or any other party any confidential information about the subject company, which has come to his/its knowledge without proper and specific authority or unless there is a legal or professional right or duty to disclose.

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Information Management 21. A valuer shall ensure that he/ it maintains written contemporaneous records for any decision taken, the reasons for taking the decision, and the information and evidence in support of such decision. This shall be maintained so as to sufficiently enable a reasonable person to take a view on the appropriateness of his/its decisions and actions. 22. A valuer shall appear, co-operate and be available for inspections and investigations carried out by the authority, any person authorised by the authority, the registered valuers organisation with which he/it is registered or any other statutory regulatory body. 23. A valuer shall provide all information and records as may be required by the authority, the Tribunal, Appellate Tribunal, the registered valuers organisation with which he/it is registered, or any other statutory regulatory body. 24. A valuer while respecting the confidentiality of information acquired during the course of performing professional services, shall maintain proper working papers for a period of three years or such longer period as required in its contract for a specific valuation, for production before a regulatory authority or for a peer review. In the event of a pending case before the Tribunal or Appellate Tribunal, the record shall be maintained till the disposal of the case. Gifts and hospitality: 25. A valuer or his/its relative shall not accept gifts or hospitality which undermines or affects his independence as a valuer. Explanation.─ For the purposes of this code the term „relative‟ shall have the same meaning as defined in clause (77) of Section 2 of the Companies Act, 2013 (18 of 2013). 26. A valuer shall not offer gifts or hospitality or a financial or any other advantage to a public servant or any other person with a view to obtain or retain work for himself/ itself, or to obtain or retain an advantage in the conduct of profession for himself/ itself. Remuneration and Costs. 27. A valuer shall provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work necessarily and properly undertaken, and is not inconsistent with the applicable rules. 28. A valuer shall not accept any fees or charges other than those which are disclosed in a written contract with the person to whom he would be rendering service.

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Occupation, employability and restrictions. 29. A valuer shall refrain from accepting too many assignments, if he/it is unlikely to be able to devote adequate time to each of his/ its assignments. 30. A valuer shall not conduct business which in the opinion of the authority or the registered valuer organisation discredits the profession. Date: Place: Signature

(Name of the Approved Valuer and Seal of the Firm / Company)

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ANNEXURE –IV

Undertaking to be submitted by the valuers for empanelment UNDERTAKING

I, ..................................................................son / daughter of ………………………………………………... do hereby solemnly affirm and state that

a. I am a citizen of India b. I have not been removed/dismissed from service/employment earlier c. I have not been convicted of any offence and sentenced to a term of

imprisonment d. I have not been found guilty of misconduct in professional capacity e. I am not an undischarged insolvent f. I have not been convicted of an offence connected with any proceeding before

any court of law in India. g. My PAN Card number…………………./GSTN Number ……………………………… h. I undertake to keep you informed of any events or happenings which would

make me ineligible for empanelment as a valuer i. I have not concealed or suppressed any material information, facts and

records and I have made a complete and full disclosure j. I act with independence, integrity and objectivity and undertake all valuation

works with an independent mind and shall not come under any influence of anybody.

k. I am not related to any of the personnel in the Bank in the department/division dealing with valuation work directly.

Dated: …………………………….

Signature……………………………….

Name…………………………………...

Address…………………………………

…………………………………………….

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ANNEXURE – V Application for Empanelment of valuers

(Application to be made to Regional Offices)

To ……………………….. ……………………….. ……………………….. Date: ………………… Dear Madam/Sir, I am a valuer of immoveable properties (land and buildings/ plant and machinery/current asset) 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 Number of years of experience in the field of valuation:…………………………...

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(Attach evidence in the form of reference letters/copies of valuation reports/any other evidence) Name and address of previous employer (if applicable): …………………………………………………………………………………….................................................……………………………………………………………………………………................................................... Details of previous empanelment, if any, with dates/duration: ……………………………………………………………………………………................................................... ……………………………………………………………………………………................................................... Membership of Professional Valuer Association (name and membership number): ……………………………………………………………………………………................................................... ……………………………………………………………………………………................................................... Registration with CBDT under Wealth Tax Act (Regn. No. and date) ……………………………………………………………………………………................................................... ……………………………………………………………………………………................................................... Permanent Account Number ( PAN ) of Income Tax Department:…………………………………………………. GSTN……………………………………………………………………… I/We are/ not Registered Valuer with Insolvency and Bankruptcy Board of India (IBBI) in compliance with Companies (Registered Valuers and Valuations) Rules, 2017 .

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References: 1)……………………………………………………………………………………………………………………………… 2)…………………………………………………………………………………………………………………………………………………… 3)…………………………………………………………………………………………………………………………………………………… ■ If the firm is partnership concern – Name of the Partners and a Brief profile with

their Qualification & experience ■ Registration number / Certificate as allotted by ICAI / IBBI / other professional

bodies ■ GSTN Number ■ Details of major assignment handled so far ( Furnish Nature of Assignment,

Nature of Assets, & Amount) ■ Whether any allied firms / partners are already empanelled for any other type of

audits for the Bank / FI. If so, furnish details ■ Whether Applicant was delisted from any Bank‟s Panel on any earlier occasion. If

so furnish details. The above information about me is true to the best of my knowledge and if found incorrect, I will be fully responsible for the consequences. Enclosed: Attested photocopies of all certificates/documents of proof

Signature:………………………..

Name:………………………… Encl: Undertaking to be submitted by valuer as per Annexure IV.

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Annexure-VI

FORMAT-F

REGIONAL OFFICE EMPANELMENT OF VALUERS

Sr No.

Name & address of the valuer / Firm

Whether Qualification/ Age of the valuer/ principal valuer/s as per prescribed norms. (Yes/No)

Whether registered under sec.34 AB of the Wealth Tax Act, 1957 (Yes/No)

Whether registered by IBBI (Yes/ No)

Whether member of respective governing associations / professional body (Yes/ No)

Whether having prescribed Years of experience (Yes/No)

Whether having 2 years of experience with Public Sector Banks (Yes/No)

Whether reports from prescribed references give satisfactory reading (Yes/No)

Whether the applicant is a tax-payer diligently filing returns for the past 3 years (Yes/No)

Whether delisted by our Bank / IBA for unfair practices in the past (Yes/ No)

Presently empanelled with & other Bank’s/FIs report (please furnish names of the institutions)

Whether the services rendered are satisfactory with our bank (Yes/No)

Appointment for valuation of type / class of asset. A) Land & Building B) Plant & Machinery C) Agricultural Land C) Any other class of asset (please specify)

Category of Valuer (A/B/ C/D)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

We recommend for empanelment of the above valuers / firms on our approved list. Date:

Signature of Regional Head

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Annexure-VII FORMAT-G

LETTER OF INDEMNITY BY ENGINEERS / VALUERS To, Union Bank of India, _________________.

Dear Sirs, In consideration of Union Bank of India (herein after called the "Bank" which

expression shall include its successors and assigns) empanelling me / us on their panel of approved Engineers and Valuers for the purpose of assessing the market value of the properties proposed to be taken as securities for the credit limits granted or to be granted by the Bank to its various borrowers, I/ We jointly and severally, extend this letter if indemnity.

Whereas by the letter of empanelment dated __________, the bank has empanelled me / us on their panel of approved Engineers & Valuers for the purpose of assessing the market value of the properties proposed to be taken as securities for the credit limits granted / to be granted by the Bank, I/ We jointly and severally agree as follows:-

I / We shall duly and faithfully perform and discharge all the duties in the works entrusted by the Bank and in relation to the purposes of empanelment, fairly without any favour and discrimination and I / we hereby undertake and agree to indemnify you, your successors and assigns at all times and from time to time from and against all loss, damage and all actions, suits, proceedings, expenses, costs, charges and demands arising out of any act, lapses, defaults, negligence, errors, mistakes committed by me/ us in performance of my / our professional obligations and I / we also hereby undertake and agree to pay to you on demand sums of money, costs, charges and expenses incurred in respect thereof and also to pay you interest on all such moneys at your ruling rate.

I / We further specifically agree that this indemnity shall continue to remain in force and I /We shall continue to be liable there under for all losses, damages, costs, charges and expenses arising out of any act, lapses, defaults, negligence, errors, mistakes committed by me/ us in performance of my / our professional obligations and shall be binding on me / us and our legal and personal representatives, successors and assigns.

Yours Faithfully, Signature

(Name and Official Seal of the Approved Valuer

Place: Date:

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Annexure-VIII

FORMAT OF REGISTER

Sr. No.

Name & address of the Valuer / Firm

Whether Credit Information Forms obtained from Valuers, Credit Report compiled & held on records

Appointment for valuation of type / class of Asset. A) Land & building B) Plant & Machinery C) Agricultural land D) Any other class of asset (please specify)

Whether de-listed by our Bank / IBA for unfair practices in the past, if yes, please quote the reference number & date of relevant letter of central office.

1 2 3 4 5

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ANNEXURE – IX

GUIDELINES FOR PAYMENT OF PROFESSIONAL FEES

The maximum professional fees payable for valuation of an asset will be as under:

Value of the security Fees payable Fees payable (In case of retail

loan: Housing Loan etc )

Upto 50000/- 500/- 500/-

Above Rs.50000/- upto Rs.1 lac 1000/- 1000/- Above Rs.1 lac upto Rs.25 lacs 3000/-

Above Rs.25 lac upto Rs.50 lac 5000/- 3000/- Above Rs.50 lac upto Rs.1 crore 10000/-

Above Rs.1 crore upto Rs.5 crore 15000/- 10000/-

Above Rs.5 crore 20000/-

Note: a. Where two or more assets in a particular account are required to be valued at one

time, then all such Assets shall be deemed to constitute a single asset for the purpose of calculating the fees of the valuer.

b. However, in exceptional circumstances taking into account the nature of the property (ies)/quantum of work involved, FGMs may permit payment of fees to valuers beyond the above ceilings subject to a maximum of Rs.40,000. Further, Large Corporate Branches/Mid Corporate Branches with heavy credit portfolio requiring valuation of property(ies) of Rs.50.00 crores and above taking into account nature of the property(ies)/quantum of work are empowered to pay fees to valuers beyond Rs.20,000/- subject to a maximum of Rs. 40,000/-.

c. For outstation traveling and diem, actual tickets up to AC- II tier and Rs.300.00 per day respectively may be considered for reimbursement.

d. The above fee structure is subject to negotiation at the time of giving each

assignment as the same is to be recovered from the borrowers. Special care needs to be taken while negotiating fees for revaluation of the assets already mortgaged to the Bank.

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Annexure-X

FORMAT – H

REGIONAL OFFICE:

DE-LISITING OF VALUERS

Sr. No.

Name & Address of the valuer / firm

Number & date of Central Office letter conveying

empanelment of the valuer

Full details of unfair practice adopted by

the valuer

We recommend for De-listing of the above valuer / firm from our approved list in view of the facts mentioned herein above. Date:

Signature of Regional Head

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Annexure-XI Format for submission of Agenda to Empowered Forum

- Examination of role of TPE in fraud

1 Name of the account

2 Name of branch

3 Regional Office / FGMO

4 Type of TPE

5 Name of TPE

6 Date of empanelment of TPE

7 Date of ZLFSC/CLFSC which declared the

account as fraud

8 Any comments of ZLFSC/CLFSC in the

minutes regarding role of TPE in the fraud

9 Any deficiency of TPE reported by any of

the offices in the past

10 Whether the TPE name is appearing in the

IBA caution list;

1) If so details (Name of the reporting Bank,

date of reporting, reasons etc.)

11 Date of show cause notice to TPE by the

department

12 Comments on reply of TPE reply to show

cause notice

13 Detailed comments & specific

recommendations of Department

regarding involvement of TPE in the fraud

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Annexure-XII

Format for review of Performance for Bank’s empanelled valuers by RO:

1 2 3 4 5 6 7

Sl. No.

Name of the value

r

Total Experience in Valuation with

our Bank (In no. of years)

No. of Valuati

on Assignm

ents conduct

ed since

01.04.2017

Timely submission of Report

s (Yes/N

o)

Comments on quality of reports submitted with respect to whether

reports submitted in prescribed format, whether valuations are in

line with the fair market value etc. [At least opinion of 3 amongst

(Branch Managers / SARAL /ULP) to be obtained]

Remarks (Excellent

/Very Good/Satisfactory/Average/P

oor)

management of credit portfolio - policy on valuation of

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