Expressing concern over the rising non-performing assets (NPAs) and wrong valuation, valuers (those who evaluate properties, plant and machinery) under the aegis of the Institution of Valuers have sought valuation charges from banks in accordance with the rates prescribed by the institution’s guidelines. Alternatively, they had also suggested that the RBI should frame a reasonable and uniform scale of valuation fee for all banks.
According to them, most of the banks are not willing to pay in accordance with the guidelines, which has resulted in wrong valuation, leading to the NPAs.
Speaking to Business Standard, Chairman of the Chandigarh branch of Institution of Valuers, B L Luthra said, “Different banks in the private and public sectors have different scales of valuation fees and methods of payment. There is no such parity in payment of valuation charges. Further, every financial institution has its regional office in Chandigarh, with so many branches here and in the nearby areas, every branch has fixed its own valuation fee tariff and payment system and work under the guidelines of the RBI and Ministry of Banking. It has been noticed that the branch manager fixes the payment system and the fee in his branch according to his convenience. Some financial institutions have fixedRs 950 as the professional fee for all valuation reports of the various properties of the different clients. This fee structure is neither reasonable nor practical, which results in wrong valuation by non-competent persons”
He informed, “According to the Institution of Valuers’ guidelines, a valuer should be givenRs 125 for a property valuedRs 1 lakh (suppose a property values atRs 1 crore, the valuer’s fee isRs 12,500). But, the financial institutions are reluctant to pay the charges, which affect the valuation process. We demand that there should be parity in payment by all the 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. He also added a single-payment system, i.e. payment by cheque by the bank, and not directly by the loanee, for fair valuation. The Institution has 20,000 members covering categories through its 42 branches spread all over India.
Expressing concern over rising NPAs of the banks, he suggested the Ministry of Banking and RBI should come up with some regulatory body to monitor the system, the proper utilisation of loan and the recovery process. “We have been requesting the RBI and the Ministry of Finance to publish the list of defaulters with the defaulting amount to avoid repetition of frauds, he said. In this scenario the valuers should be very careful in handling valuation cases, release of funds and exercise strict monitoring over proper and timely utilisation of funds to avoid increase in NPAs,” he said.