Amendment on valuation policy and security requirements

(1) Valuation Policy

(a) Valuation of Land. The market value shall be considered for calculating the value of the property. The market value shall be obtained either from the External Valuer empanelled by the Corporation or from the Revenue Department.

The External Valuer shall consider the following factors while fixing the market value.

  • Document value with registration and other charges.
  • Fair value as notified by the Government.
  • Indexed cost of acquisition in the following manner:

Actual Cost of Acquisition x CII of the year in which asset is valued
CII of the year in which asset is acquired

(CII- Cost Inflation Index)

  • Similar property document value.
  • Value based on enquiries made with SRO/ Village office/ local people.

The Valuer has to ascertain the actual area legally owned by the titleholder based on local enquiry, verification of location sketch, survey plan, etc. The valuer shall arrange the survey plan through a private surveyor, if required.

The extent shown in the Title Deed or the Actual Extent in Legal Possession, whichever is lower, will be considered for valuation purposes. The final value of the land shall be based on factors like the type of land, road access, location, distance from nearest town/ city, availability of infrastructure, proximity to public/ private institutions, saleability of the land, demand in the market, etc. Sufficient reasoning should be provided in the valuation report for the variations from document value/ fair value/ indexed cost of property/ similar document value.

The market value of the land (Valuation Certificate) issued by the Revenue Department of Government of Kerala, by an official of not below the rank of a serving Tahasildar, as per the guidelines issued by the Government from time to time, can also be accepted by the Corporation, instead of the External Valuer report. 

(b) Cost of Building for Project Cost and Security purposes. The value shall be fixed according to the prevailing cost of labour& materials as approved by the Institution of Valuers, Thiruvananthapuram. Depreciation, shall be provided for existing buildings.

(c) Margin Calculations. Assets and its margin that can be considered for security purposes shall be as follows:

 

Item

Margin (%)

Value taken as security (%)

 

a)

Land including land development/land scaping/ Gardening

NIL

100

 

b)

Building / Building Renovation

15

85

 

c)

Plant & machinery and equipment including erection, electrification

 

15

 

85

 

d)

Second hand imported and reconditioned machinery

50

50

 

e)

Other second-hand machinery

50

50

 

f)

Moulds& Dies

25

75

g)

Tools/Accessories/Fittings

75

25

h)

Furniture /Fixtures / shelf

 

 

 

  • For Hotel Sector

25

75

 

  • For Other Projects

75

25

 

i)

Technical know how

 

 

  • Developed by the Promoter and has patented / copyright is hypothecated with Corporation and entered into non-disclosure agreement

75

25

  • Others

100

Nil

j)

Computer & accessories
including erection, electrification

 

50

 

50

k)

Software

 

 

 

  • Developed by the Promoter and has patented / copyright is hypothecated with Corporation and entered into non-disclosure agreement

50

50

 

  • Others

100

Nil

 

l)

Interior decoration

75

25

 

m)

Office equipment and furniture

75

25

 

n)

Medical Diagnostic equipment which are part of a hospital (life of the items should cover the loan period)

50

50

 

o)

Diagnostic and testing equipment/ lab equipment

50

50

 

p)

Furnishing/ curtains/ and decorative items

100

NIL

 

q)

Crockery, cutlery and vessels

75

25

r)

Vehicles including extra fittings cost of body, essential tools and excluding insurance, Road tax etc.

50

50

 

s)

DG set

70

30

 

t)

Lift, Firefighting equipment, Air Conditioners etc.

70

30

 

u)

Cost of optical fibre lines

100

NIL

 

v)

Gymnasium equipment

50

50

w)

Reference books

100

NIL

 

x)

Kitchen equipment including erection and electrification

50

50

 

y)

Fixed Deposit/ Gold/ guaranteed Surrender Value of IRDAI approved Insurance policies

Nil

100

 

While calculating security value, preliminary expenses, other intangible expenses, deposits with Electricity Board, Margin Money for Working Capital etc. are not to be taken.

All values to be considered after applicable depreciation.

 

 

(2) Security Requirements

(a) Benchmark Asset Coverage Ratio (ACR).  The benchmark Asset Coverage Ratio (ACR) for all loans shall be as follows (except for CMEDP Loans/ Contractor Loans/ Start-up loans/ other Special Schemes where security requirements are specifically provided):

Sl No

Parameter

Norms

  •  

MSMEs in Manufacturing Sector

New Entity

1.40:1

Existing Entity

1.30:1

  •  

MSMEs with CGTMSE Coverage

1.20:1

  •  

Service Sector Projects

1.75:1

  •  

Commercial Real Estate (CRE) Projects including Short Term Loan

2:1 (25% collateral coverage within overall ACR of 2:1)

  •  

Commercial Real Estate Projects (New entrants) Short Term Loan

2:1
(50% collateral coverage in addition to ACR of2:1)

  •  

Short Term Loan (Other than CRE)

1.50:1

  •  

Granite Crushing Units

Overall 1.4. Mining area should not be considered for security purposes.

The loan amount earmarked for machinery shall be covered with collateral security coverage of 50%. This collateral shall not be quarry land.

  •  

COVID-19 Support scheme 1.0 for existing customers

MSME – 1.25:1 (Relaxable to 1.13:1 to manufacture sector)
CRE – 1.75:1
Contractor – 1:1 for LoC and 1.25:1 for modified scheme (old scheme)

  •  

COVID-19 Relief Loan Scheme 2.0 for Existing Customers of KFC in MSME, Healthcare and Hospitality Sector (New Scheme)

 

1:1

  •  

Working Capital component

Coverage with at least 150% collateral security.
It is relaxable to collateral security requirement of 50% in the case of MSME units, if ACR coverageof1.50 for the working capital component is available in Primary security, in addition to the stipulated coverage for term loans.

  •  

Rented/ leased Premises

Minimum overall ACR required is 2:1.
(Relaxable to 1.50:1 for MSME units in Manufacturing Sector by the Sanctioning Authority, based on prudent analysis and with collateral coverage of at least 50% of the proposed exposure).

  •  

CMEDP Loans *

1:1

* The minimum loan amount that can be applied under CMEDP for FY 2021-22 shall be Rs.5 lakh.

(b) Minimum security requirements for Government Contractor Loans. Minimum security requirements for various facilities to Government Contractors shall be as follows:

Sl No

Facility Name

Norms

  •  

Performance Guarantee/ Bank Guarantee Facility

100%

  •  

Work Execution Facility

100%

  •  

EBDS Facility- Early Bill Discounting Facility with Security

50%

  •  

EBDS Facility- Early Bill Discounting Facility without security

Nil

  •  

GBDS Facility    - Government Bill Discounting Facility

Nil

  •  

EF Facility       - Equipment Finance Facility

100%