Bank of India to Revaluate Its Fixed Assets

August 23, 2007	(Be the first to rate this story!)  Loading ...
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The Bank of India (BoI) is looking forward to raise its Tier II capital, a secondary bank capital including undisclosed reserves and subordinated term debt. The plans have encouraged the bank to revalue its fixed assets.

Revaluing the assets will help the bank to ensure its fair market value and fixed assets such as properties. The board of directors of Bank of India (BoI) will have a meet on Thursday and revalue identified fixed assets. They will also give a thorough consideration on the increase in their value during the current quarter.

According to the set of guidelines by the Reserve Bank of India (RBI), 45% of revaluation reserves can be counted as Tier II capital. Once the revaluation process will be over and the crystallization of revalued fixed assets is done, Tier II capital of the Bank will naturally increase, says the Bank.

The concept of revaluing the assets has been followed by a few banks in the recent past. Industry watchers see the possibility of the BOI selling off some of its properties after the reassessment. However, the bank has not given any hint regarding which properties to sell.

According to the earlier guidelines by the RBI, revaluation reserve could not be taken as the core capital as they were be more temporary in nature.

The RBI wants banks to take necessary steps as well as have a discerning eye while creating a policy for revaluation of their properties. Revaluation reserves reflect true increase in the market value of the properties. Banks must follow an effective policy for reassessment of fixed assets owned by them.

News Published Under:   Banking and Finance |

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