Valuation Under SARFAESI Act, 2002
The SARFAESI Act, 2002, enables banks and financial institutions in India to recover non-performing assets (NPAs) by enforcing security interests and asset reconstruction without the need for prolonged court proceedings. Valuation under this Act plays a vital role in determining the fair value of assets being reconstructed or sold to recover defaulted loans. The valuation process helps set the reserve price for asset sales and ensures transparency and fairness in the recovery process. Saffron Multicon ensures compliance with the regulatory framework and utilizes certified valuers to provide accurate and reliable valuation reports for asset recovery under the SARFAESI Act.
Objective of Valuation Under SARFAESI Act
- Facilitates asset recovery and enforcement of security interests for non-performing assets (NPAs).
- Provides a framework for banks and financial institutions to recover bad loans and enforce security interests without court proceedings.
Key Aspects
1. Asset Reconstruction and Securitization
- Helps assess the value of assets for reconstruction or securitization.
- Valuation methods focus on market value, condition, sale potential, and market conditions.
2. Enforcement of Security Interest
- Establishes asset value when enforcing a security interest under Section 13.
- Valuation aids in setting the reserve price for asset sales if the borrower defaults.
Key Provisions and Guidelines
1. Appointment of Valuers
- Certified valuers with expertise in market value assessments are required.
- Valuers must follow professional standards set by bodies like ICAI.
2. Valuation Reports
- Detailed and accurate reports reflect true market value and ensure transparency.
- Reports help set reserve prices, guide restructuring, and protect stakeholder interests.
3. Regulatory Framework
- Compliance with fair valuation principles recognized in asset management practices.
- The SARFAESI Act provides the legal framework for asset recovery, relying on external valuation standards.
Comparison with Other Acts
- FEMA: Focuses on cross-border transactions, while SARFAESI deals with domestic asset recovery.
- Companies Act, 2013: Pertains to corporate restructuring, while SARFAESI addresses NPA recovery.
