The SFA Asset Class Covers What an Entity Holds, Not Just What It Issues

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.

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 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. For the SFA class generally, IVS is the default, not ICAI VS 303.

IVS added a dedicated Financial Instruments standard, IVS 500, only in the edition effective 31 January 2025, the same edition that renumbered the Bases of Value and Valuation Approaches chapters, covered in the piece above. 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. IVS 500 doesn't answer held-versus-issued by naming both sides the way ICAI VS 303's "owns or issues" language does; it simply never raises the distinction. Substantively it is thin, a process standard governing data, models, and documentation, not a definitional one, and it never names a single instrument type. ICAI VS 303 fills that gap as corroborating, Chartered-Accountant-specific material: its "owns or issues" line, and its direct naming of a credit default swap alongside the preference share already covered in Preference Shares Are an SFA Valuer's Job. Redemption Isn't..

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's own illustration is generic, 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." Together the two land in the same place by different routes, both affirmative instructions to value what a business holds, not just what it has issued.

Regulation 35 of the Liquidation Process Regulations appoints registered valuers by asset class to jointly 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 itself holds, investments, receivables, a loan book, the asset side of its own balance sheet, using the same license that would value its issued share capital. IBBI notified IVS as binding, not 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.

The genuine gap sits narrower than issued-versus-held. Section 2(h) of the SCRA, 1956, covered in Securities or Financial Assets, pulls "derivative" into "securities" through Section 2(ac): broadly, a security derived from a debt instrument, share, loan, or risk instrument, or a contract deriving its value from the price or index of underlying securities. But Section 18A limits which derivative contracts are actually 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, "derivative," "swap," "option," "forward," "future," "credit default swap," "structured product," and "compound instrument" appear nowhere. 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 for accounting purposes is real, routine work under Ind AS 109, but it runs through a bank's own models and FEDAI conventions, not a Section 247 registered valuer engagement.

The asset-side question and the derivatives question have different answers, and which standard actually governs matters as much as the answer itself. On scope by balance-sheet side, the framework is affirmative: IVS 500's unqualified Scope clause and IVS 200's non-operating assets requirement, corroborated by ICAI VS 303 and VS 301, put an entity's investments and holdings squarely inside an SFA valuer's job, exactly as Regulation 35 already assumes in practice. On derivatives, interest rate swaps included, the silence is total: SCRA's own securities definition stops at exchange-traded and notified derivatives, and IVS 500 itself hasn't yet named a single derivative type.