The Hindu Business Line : `Valuation reports should give realistic forecast of assets'

The valuation report, in the cases of bank finances, should give a realistic forecast of the assets concerned, apart from giving the present realisable value, according to Mr Anantakrishna, Chairman and Chief Executive Officer of Karnataka Bank Ltd.

Inaugurating a seminar on `A new dimension to valuation in the emerging new scenario', organised by the Mangalore branch of the Institute of Valuers here on Sunday, he said the valuers have to take note of the increase and decrease in the value of assets keeping the future in mind.

"According to my experience, every nine years the value of the property goes up and comes down. Today the value of the property has reached the peak in some places. While valuing, one has to be very careful and think about such a situation. The valuers have to take note of the increase in the value and its decline," he said.

Stating that 45 per cent to 50 per cent of the credit in banking sector is for project finance, he said in the present scenario where the value of the land is increasing in geometrical proportion, the valuer has to be very careful.

When the value of the property is going up, there should be a limit for that. Banks should be very careful when financing this kind of assets, and should not allow the asset bubble to bust. And it is the duty of the valuer to see that the bubble never busts.

"If the asset bubble busts, the entire economy will be affected. Here is the new challenge for you in the coming days," he said.

According to the requirements under the internationals standards, any loan has to be rated today. While rating the borrower, the value of the security offered on that loan accounts a lot. Valuation also plays an important role in the capital requirements for the business of the banks, he added.

Mr A.G. Pai, General Manager of ONGC-MRPL, Mangalore, delivered the keynote address on the occasion.

More Stories on : Financial Services | Karnataka

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
SBT loans for rabbit breeders

`Valuation reports should give realistic forecast of assets'

Karnataka Grameena bank plans to finance solar units

Bonds remain firm on buoyant tax flows

HSBC `mela' from today

Union Bank bond issue

Reliance ADAG enters credit card biz

Karnataka Bank keen to double biz in 3 years