
ECCB: Prudential Standard – Managing Real Estate Valuation Risks
This is a very important standard which requires licensed financial institutions (LFIs) to manage real estate valuation risks and to ensure prudent lending practices in an age of dynamic property markets.
The Valuation Standard establishes minimum requirements for real estate valuation programmes, appraisal practices, and collateral risk management at LFIs.
Specifically, the Valuation Standard covers:
- Establishes the structure, policies, and independence requirements for effective valuation oversight.
- Outlines criteria for selecting competent and independent appraisers and evaluators.
- Provides guidelines for conducting appraisals and producing comprehensive appraisal reports.
- Covers processes for reviewing and validating appraisals to ensure quality and compliance.
- Mandates ongoing monitoring of collateral values and portfolio risks.
- Establishes requirements for managing and overseeing third-party valuation service providers.
- Focuses on ensuring adherence to the standard through internal controls and monitoring.
- Addresses timely payment practices to maintain appraiser independence.
Please note that the ECCB does not impose any requirements on LFIs with regard to the frequency of conduct of property valuation.
The entire Valuation Standard can be accessed at
The ECCB expects all LFIs to adhere strictly to the Valuation Standard to ensure reliable property valuations, prudent lending decisions, and effective management of real estate collateral risks; ultimately protecting consumers and maintaining financial stability.
Compliance with the Valuation Standard is being monitored by the ECCB through off-site supervision and risk-based on-site examinations. LFIs found to be non-compliant will be subject to remedial and enforcement actions permitted under the Act.
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