The SFA Asset Class Covers What an Entity Holds, Not Just What It Issues
The Securities or Financial Assets class is often read as covering an entity's own issued instruments, leaving the investments, loans and derivative positions on the asset side to someone else. No standard draws that line. Where the framework does go quiet is narrower and more surprising. This piece checks IVS 500 and IVS 200, the standards a Section 247 valuer actually defaults to under Rule 18, against ICAI's own text, and separates a settled answer from a genuine gap.
Annexure IV Was Never Going to Answer This
Already established in Securities or Financial Assets: One Half Defined, One Half Isn't: Rule 2(1) of the Companies (Registered Valuers and Valuation) Rules, 2017 defines "asset class" only in the abstract, and Annexure IV lists who can register as a valuer for each class, not what falls inside it.
No line was ever drawn there between an entity's own issued instruments and instruments it holds as assets, for any of the three classes. The answer has to come from the standards.
IVS 500 Governs This, Not ICAI VS 303
Already established in What Valuation Standard Actually Governs an SFA Registered Valuer?: Rule 18 requires a registered valuer to follow Central Government-notified standards, and until they are notified the fallback is internationally accepted valuation standards, meaning IVS, or the valuer's RVO-adopted standard. ICAI's Valuation Standards bind only Chartered Accountants doing the work in that capacity, and ICAI itself frames them as a stopgap.
IVS added a dedicated Financial Instruments standard, IVS 500, only in the edition effective 31 January 2025. Its Scope clause, paragraph 20.01: "This asset standard must be applied in all valuations of financial instruments used for, but not limited to, financial, tax, or regulatory reporting." No issuer or holder qualifier appears. IVS 500 does not answer held-versus-issued by naming both sides the way ICAI VS 303's "owns or issues" language does. It never raises the distinction at all.
Substantively IVS 500 is thin: a process standard governing data, models and documentation rather than a definitional one, and it never names a single instrument type. ICAI VS 303 fills that gap as corroborating, Chartered-Accountant-specific material, through its "owns or issues" line and its direct naming of a credit default swap alongside the preference share covered in Preference Shares Are an SFA Valuer's Job. Redemption Isn't..
IVS 200 Requires the Same Thing in Thinner Language
The IVS home for non-operating assets and cross-holdings is IVS 200, Businesses and Business Interests, not the Financial Instruments chapter. Paragraph 120.02: "the value of non-operating assets and/or liabilities may need to be separately determined and added to the value of the operating assets to determine the value."
IVS illustrates that generically, with an idle manufacturing plant. ICAI Valuation Standard 301 is more specific: "Inter-company adjustments or substantial cross holdings between companies in the business valuations should be considered at fair value." The two land in the same place by different routes, and both are affirmative instructions to value what a business holds, not only what it has issued.
IBC Practice Already Runs on This Reading
Regulation 35 of the Liquidation Process Regulations appoints registered valuers by asset class to determine a corporate debtor's fair value and liquidation value, the two-figure mechanism covered in Fair Value vs. Liquidation Value: Two Numbers, Not One.
An SFA valuer's actual job there is to value whatever securities and financial assets the debtor holds — investments, receivables, a loan book, the asset side of its own balance sheet — on the same licence that would value its issued share capital. IBBI notified IVS as binding, not as a fallback, for every IBC valuation from 1 April 2026, so that work now runs through IVS 500, a chapter barely two months old at the time.
Derivatives Are the Real Gap, and IVS Never Names One
Section 2(h) of the SCRA, 1956, covered in Securities or Financial Assets, pulls "derivative" into "securities" through Section 2(ac). But Section 18A limits which derivative contracts are legal and enforceable under the Act to those traded and cleared on a recognised stock exchange, or Government-notified. An interest rate swap is neither. It is an over-the-counter contract regulated by RBI under Section 45W of the RBI Act, outside the SCRA "securities" definition Section 247 borrows from.
The absence runs deeper than one instrument. Across IVS 500, and the entire IVS document beyond it, none of the following appears anywhere:
- "derivative," "swap," "option," "forward," "future"
- "credit default swap," "structured product," "compound instrument"
ICAI VS 303 at least names a credit default swap and compound instruments. IVS 500, the standard a registered valuer actually defaults to, names none of it. Fair-valuing an interest rate swap is real, routine work under Ind AS 109, but it runs through a bank's own models and FEDAI conventions, not a Section 247 engagement.
What This Means in Practice
Accept an engagement to value an entity's investments, loan book or cross-holdings on the SFA licence without hesitation. IVS 500's unqualified Scope clause and IVS 200's non-operating assets requirement, corroborated by ICAI VS 303 and VS 301, put the asset side squarely inside the class, and Regulation 35 already assumes it in practice.
Treat an over-the-counter derivative differently. Say plainly in the engagement letter which standard is being applied and on what basis, because SCRA's securities definition stops at exchange-traded and notified derivatives, and the standard you would otherwise cite has not named a single derivative type.
The balance-sheet question is answered. The derivatives question is not. Only one of them is worth arguing about.