POINTS TO BE REMEMBERED BY A PANEL VALUER WHEN HE DOES VALUATION FOR PRIMARY SECURITIES; OPINION BY BK SIR
KNOWLEDGE BANK FROM B KANAGA SABAPATHY
LET KNOWLEDGE SPREAD
Message from B. K. sir 09.03.2023
Points to be remembered by a panel valuer when he does valuation for primary securities :
1. Value varies with purpose. The purpose of valuation of primary securities (in most of the times) is to certify the cost.
2. Primary security is the asset created from the bank’s finance. For primary securities, the scope of valuation is to do vetting of the estimates, certify stage cost and issue completion certificate along with the final cost. For the purpose of purchasing a ready-built property, the cost to be incurred by the proposed purchaser is to be certified.
3. Approved drawing is very significant while doing valuation for primary security.
4. Change in specifications, alteration in the interior arrangements, marginal variation in FSI & plot coverage can be considered as minor violations which may not have any serious impact while certifying the cost.
5. Considerable increase in FSI, non – adherence of plot coverage, construction of additional floors, change of use of the building with reference to the approved drawing are considered as major violations which may have serious impact while certifying the cost.
6. If it is a plot in the newly formed layout, verification of identification is more important.
7. In the case of apartment, location of the floor, location of the flat in the floor, ascertaining the genuineness of composite rate are your main duties. Mention six boundaries of the flat.
8. If the actual area and number of floors are more than the approved drawing and if there is a direction from the bank to certify the cost as per the estimate vetted already, certify the value as per the directions but never forget to record the facts.
9. Make it a point that the property is inspected physically every time whenever a valuation report is requested.
10. Never do the undervaluation or overvaluation in order to favour the borrowers. It will be considered as collusion.
With best wishes,
B. KANAGA SABAPATHY
[email protected]
www.bkanagasabapathy.com
About the Author:-
- Mr. B. Kanaga Sabapathy born in 1951, is a Civil Engineer who belongs to the 1972 batch of Regional Engineering College, Tiruchirappalli in Tamilnadu.
- He is a Registered valuer of the Central Board of Direct Taxes, a Professional Engineer and also a Chartered engineer. Valuation is his main profession..
- He was the National Vice-President of the Institution of Valuers (India) for 11 terms.
- He is a regular contributor of articles in the Indian Valuer Journal from the year 1985. His articles especially his regular column “Questions & Opinions” are very popular among the practising valuers in India.
- His book “Guidelines on Valuation for Banks” (2002) is used to be referred by many banks. The valuation formats designed by him were accepted and adopted as the formats by many banks in the country.
- His son K. Arun and daughter B.K. Aruna are also approved valuers and they also contribute articles to the Indian valuer journal.
- His guru: Mr. C.H. Gopinatha Rao, Chennai.
- His mentor: Mr. R.K. Gandhi, Mumbai.
- His role model: Mr. S. Rajaratnam, Chennai.
- His best students: Thousands of valuers in the country
