Financial Risk Manager

Ways of Financial and Risk Management

Is Revaluation Surplus part of Equity?
Saturday, March 14, 2009

Revaluation reserves will remain part of the equity for first three years only, from the date of asset revaluation, during which time the borrower will strengthen its equity base to enable it to avail facilities without the benefit of revaluation reserves.

However, if a borrower gets revaluation during the three years period, the borrower will be allowed the benefit from fresh revaluation, to the extent of increase in revaluation reserves, but restricting the benefit of such incremental value to 3 years only.

Similarly, if after 3 years, the borrower again gets revaluation of the assets with resultant addition in their value, the benefit of such revaluation may also be allowed for the next 3 years, again to the extent of increase in revaluation reserves.

Ref: Prudential Regulation issued by SBP

Labels: Prudential Regulations, Revaluation Surplus, SBP

posted @ 2:20 PM,

2 Comments:

At March 14, 2009 at 5:54 PM, Anonymous said...: Doing great job. Keep it up.
At October 4, 2011 at 12:08 PM, Anonymous said...: If we're taking the 3 years Revaluation Surplus in our Total equity value, will we be taking this amount for the purpose of the leverage ratio as well?