Valuation of securities - bank loans

Shyam Sunderji 

Let me explain what I had seen in practical situations in relation to tangible assets being Land / & Building whether offerd as primary or collateral security .  Different Banks follow different policies in this regard . Certain Banks insist for fresh valuation once in 3 Years and some other banks once in 2 years  ( Bank's mangement is free to frame this ) . Certain Banks insist for at least 2 independent valuations by their panel valuers ( For eg . SBI  in the case big borrower a/cs ) . Some private sector Banks ( ICICI) have their own internal valuers whose report alone is considered . This frequency is set  generally for  all loans  irrespective of whether it has fallen into NPA or not . 

However in a case where the A/c has fallen into  NPA  it would be considered prudent to take a fresh valuation  and such practices were seen as followed   .     

Kindly go through this and revert  

Thanks Hareesh Sir for your guidance. So in the case of a collateral security of CC Loan - Residential Property, if valuation report is more than 3 years old, then should that account be a NPA. What will be the implications of this?

Simply because  the valuation has not been done after lapse of 3 years  will not make an a/c as NPA .  I R A C norms alone for NPA CATEGORISATION 

It is an iregularity which can be commented up on 

As Per RBI Guidelines:-

Every bank is required to make policy for valuation of tangible securities.

Generally banks have a practice to do in once in three years.

And in the case of audit , it is duty of auditor for valuation of securities he should take latest report .