# How does the Indian Renewable Energy Development Agency (IREDA) value the spare property I offer as collateral for a loan?

Canonical: https://senseible.earth/answers/ireda-collateral-property-two-valuers-lower-value

IREDA asks for valuation reports from two registered valuers and counts the lower realisable value. You pay the valuer. A fresh valuation is due every three years, and sooner if the loan slips badly behind. The property must also outlast the period it secures.

## Collateral in one sentence

Collateral is a spare property you offer in addition to the project itself, so the lender, the Indian Renewable Energy Development Agency (IREDA), has more to fall back on. Think of asking two shops to quote for your old scooter and agreeing to take the lower offer: that is the spirit of the rule below.

## What the norms say about the valuation

- Valuations from 2 valuers registered or approved with the Insolvency and Bankruptcy Board of India (IBBI) are to be provided.
- Of the two reports, the lower realisable value shall be considered.
- The valuation fee is to be paid by the borrower company only.
- A fresh valuation is to be carried out every three years. If the loan falls in the Special Mention Account 2 (SMA-2) category for six months or more, a fresh valuation is carried out and then every three years after that. SMA-2 is a stage banks use for loans that have fallen well behind on payments.
- When a later valuation is needed, the IBBI valuer should be different from the previous one.
- The collateral property's life is to be more than the period of the collateral security. If the security runs for the loan tenure, the property must outlast the loan.

## Which property counts

The norms say property with clear title, bought in the borrower company's name out of its own funds, or otherwise acquired beyond the funds and equity planned for the project cost, can be considered as collateral. A certificate from the statutory auditor, or from a chartered accountant when there is no statutory auditor, is to be submitted to that effect.

The norms add that IREDA will obtain a valuation from a single registered valuer once its process of empanelling valuers is complete. Until then the two-valuer rule above is the one printed.

## What to prepare

- Title papers showing the property is in the borrower company's name.
- The auditor or accountant certificate on how it was bought.
- Budget for two valuations now and a fresh valuation in three years. The norms do not say if that one needs two valuers, so ask.
- A note of how long the property will remain usable, to show it outlasts the security period.

## Example: two valuations of one plot

- Valuer A: rupees (Rs) 1.20 crore realisable value
- Valuer B: Rs 1.05 crore realisable value
- Counted by IREDA: the lower, Rs 1.05 crore
- If extra security of Rs 1.10 crore was asked, this plot falls Rs 0.05 crore short (1.10 minus 1.05)

Example numbers only. We assume the plot is counted at its lower realisable value against the amount asked; the norms do not say so. Real valuations and the security amount come from your valuers and sanction letter. A crore is 10 million and a lakh is 100,000.

## What Senseible does here

Senseible has no part in valuing a property. What it reads is fuel invoices and electricity bills into monthly records, so the energy the project buys today is on file next to the valuation papers. Senseible can pass verified records to financing partners. The partner decides. Nothing is promised.

- [IREDA loan security in plain words](https://senseible.earth/answers/ireda-security-for-a-loan-in-plain-words)
- [Bank guarantee until the mortgage is ready](https://senseible.earth/answers/ireda-bg-or-fd-instead-of-collateral-deadlines)
- [Special Mention Account stages explained](https://senseible.earth/answers/msme-loan-sma-0-sma-1-sma-2-meaning)
- [Green loan readiness check](https://senseible.earth/green-loan-check)

Sources: [IREDA, Financing Norms and Schemes, issue 35, updated up to 01.10.2026: section 5.3 B, Additional Securities, a) Mortgage of collateral property and Note-1](https://www.ireda.in/IredaWebPortal/documents/loan-products/financing-norms-01-10-2026.pdf)

Last reviewed 2026-11-07. Wording follows IREDA's financing norms updated up to 1 October 2026. The SMA-2 gloss and the scooter comparison are ours. Check the current norms and your sanction letter.