India’s financial regulatory framework governing the valuation and recovery of secured assets is being strengthened through new compliance and transparency measures, Finance Minister Nirmala Sitharaman told Parliament while outlining policy steps aimed at ensuring stricter assessment of mortgaged properties by banks and financial institutions.
Responding to supplementary questions in the Lok Sabha during Question Hour, the minister said the government and financial regulators have introduced a set of measures to ensure that the valuation of collateral used in lending is carried out through standardized and rigorous procedures. The policy framework is designed to improve transparency in lending practices and strengthen the legal processes associated with asset recovery.
According to Sitharaman, the Reserve Bank of India has issued master directions requiring banks and other regulated entities to adopt a structured approach for assessing mortgaged assets. These directions mandate financial institutions to establish board-approved policies governing property valuation, including collateral used to secure loans and other credit exposures.
The minister said the guidelines require that property valuation be carried out only by professionally qualified independent valuers. Banks and housing finance companies must maintain panels of certified valuers to ensure that assessments are conducted in accordance with established professional standards and regulatory oversight. The policy aims to reduce the risk of inflated asset valuations, which can create vulnerabilities in the financial system and affect credit quality.
In addition to independent valuation requirements, regulators have also mandated multiple valuation reports for high-value properties. Financial institutions must obtain at least two separate valuation assessments for properties exceeding specified thresholds. For banks, this threshold has been set at ₹50 crore, while housing finance companies must obtain dual valuation reports for properties valued above ₹75 lakh. Policymakers say this provision helps ensure greater accuracy and reduces the potential for conflicts of interest during loan appraisal.
The government has also taken steps to modernize the legal infrastructure for asset recovery and auction processes. Sitharaman noted that Debt Recovery Tribunals across the country have been directed to conduct auctions exclusively through electronic platforms. The move is intended to increase transparency, improve efficiency in the disposal of distressed assets, and prevent procedural irregularities during property auctions.
To facilitate digital auctions and property listings, authorities introduced an online platform called e‑Bikray in 2019. The portal was designed as a centralized marketplace where banks and financial institutions could list properties for auction under existing debt recovery laws. The system supports auctions conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debts and Bankruptcy Act, 1993.
According to the finance minister, the platform has since been upgraded into a more advanced digital ecosystem called BAANKNET, which was launched in January last year. The revamped system integrates multiple services related to property listing, valuation information, and e-auctions, enabling banks and regulators to manage recovery proceedings more efficiently.
The reforms are part of broader policy efforts aimed at strengthening the legal and regulatory architecture governing India’s credit markets. By enforcing stricter valuation norms and digitizing auction processes, the government and regulators seek to reduce systemic risks associated with non-performing assets while improving transparency in the financial sector.
Financial analysts say the measures also align with ongoing reforms designed to improve banking sector governance and ensure that lending decisions are supported by accurate asset valuation practices. As banks continue to address legacy bad loans and strengthen balance sheets, regulators believe improved collateral assessment and transparent recovery mechanisms will play a critical role in maintaining financial stability and investor confidence in India’s banking system.