The State Bank of Pakistan said on Saturday that the Desktop Evaluation will only be for the use of credit management purpose of respective banks. Thus, the same will have no impact on provisioning requirement, assessed on the basis of full-scope evaluation.
In its BPD Circular No 24, the SBP defined 'Desktop valuation' as "an Interim Brief Review of Full-scope Evaluation, so that any significant change in the factors, on which the full-scope valuation was based, is accounted for and brought to the notice of the lending bank."
The SBP made these clarifications/modifications in R-8 & 11 of Prudential Regulations for Corporate end Commercial Banking and SME Financing, respectively, wherein the requirement of conducting Ful1-scope and Desktop Evaluation have been mentioned
The SBP explained that in case the loans exceed 10 percent of the banks/DFIs' equity, the Desktop valuation will be done by the same evaluator who had conducted the full-scope evaluation, (the evaluator should be on the approved panel of PBA); whereas, for loans below this threshold, the securities can be evaluated by the banks themselves.
For conducting Desktop Evaluation, SBP said, the evaluators will pay a short visit to the bank and the borrower's site. The bank's responsibility in this respect will be to ensure that the evaluator is contacted for conducting Desktop Evaluation, and will provide all necessary information to the evaluators, which are materially important for the interim review (Desktop Evaluation), the central bank pointed out.
In cases where the evaluators are not allowed by the borrowers to enter their premises, the SBP warned, the full-scope evaluation, conducted as such, will not be accepted for provisioning benefit. However, SBP clarified that full-scope and Desktop Evaluation are not required in case of Housing Finance under Prudential Regulations for Consumer Finance.