Valuers attack banks, ask for uniform valuation charges

Valuers (those who evaluate properties) in Chandigarh have asked for valuation charges in accordance with the rates prescribed by the Institution of Valuers' guidelines.

Alternatively, the RBI should frame a reasonable one scale of valuation fee for all banks.

At present, most of the banks are not willing to pay in accordance with the guidelines, which has resulted in wrong valuation, leading to non-performing assets.

Talking to Business Standard, Institution of Valuers' Chandigarh branch Chairman B L Luthra said, "Different banks in the private and public sectors have different scales of valuation fees and methods of payment. Moreover, most of them don't issue letters of authority and often enter into bargaining, due to which wrong valuation often takes place and also leads to unethical practises."

According to the Institution of Valuers' guidelines, a valuer should be given Rs 125 for a property valued at Rs 1 lakh (suppose a property is valued at Rs 1 crore, the valuer's fee is Rs 12,500). But they are given by financial institutions, affecting the valuation process.

Pointing out a case, Luthra said: "The State Bank of India (SBI) recently imposed a totally unreasonable tariff fee for valuers, the SBI gives a valuation fee of Rs 1,250 for any number of valuation reports at different stations of a borrower. When we requested the SBI to reconsider, the bank reduced the fee from Rs 1,250 to Rs 950."

He added several other banks did the same thing when it came to pay the valuers.

He requested the RBI to frame a reasonable one scale of valuation fee for all banks. "Since all the banks are working as per the guidelines of the RBI, we request the RBI authorities to kindly redress our grievances and fix the valuation fee scale as prescribed by the Institution of Valuers, New Delhi," he said.

Commenting on valuation, he said: "Valuation is not a simple gimmick with various indices, a game of addition, subtraction and multiplication and thereby bringing a bad name to the profession, further harming and fiscal health. In fact, the valuation report is a scientific analysis of reliable data which should be processed honestly and efficiently and their report should appear to be accurate. Action without knowledge is destructive. A valuer is supposed to explain with reliable documentary evidence the figures brought out in the report. Apart from the report, the credibility of the borrower has to be checked by the officer of the financial institution as the valuation report is not the only criterion for the banker to sanction loan."

He further added: "In case the valuation report is found inaccurate and a fraud document is submitted, the valuer and bank officers, as the case may be, can be prosecuted at any time for criminal offense and fraud."

He said waiving old loans and sanctioning new loans was not a healthy solution.