Empanelled valuation agency

Valuing an equity share is easy. The exchange prints a price every second. Valuing a debt or money market security is not so easy. Most of them do not trade every day. The workbook's answer is simple. It takes this job away from individual portfolio managers. It gives the job to a shared, approved panel instead.

APMI empanels valuation agencies. These agencies give security-level prices to portfolio managers. Every portfolio manager must use them. This is mandatory. The manager must pick one or more empanelled agencies. It must use them to price every debt and money market security it manages.

The rule (Chapter 10, section 10.6, Valuation of Securities by Portfolio Managers).

• APMI prescribes standardised valuation norms for portfolio managers.
• Valuation of debt and money market securities must follow those standardised norms.
• APMI empanels valuation agencies to provide security-level prices.
• Portfolio managers must use only empanelled agencies for this purpose; sourcing debt or money-market prices elsewhere is not an option.
• The ultimate responsibility for fair valuation still rests with the portfolio manager, not with the empanelled agency it uses.

The workbook does not name the empanelled agencies themselves, nor state how many there are or what fee they charge. It establishes the mandatory-use rule and the standardised-norms requirement, without those operational details.

Figures illustrative; the workbook gives no fee or portfolio-size number for this rule.

Ashoka Capital Advisors runs a debt-heavy PMS mandate worth ₹1,20,00,000, held in a mix of corporate bonds, commercial paper and government securities. To value this portfolio at the end of each month, Ashoka does not set its own prices, even if its in-house credit team has a strong internal view on fair value.

Instead, Ashoka takes prices for each security from an APMI-empanelled valuation agency, applying APMI's standardised valuation norms consistently across the portfolio. Say the agency prices one corporate bond holding, carried on Ashoka's own books at ₹25,00,000, at ₹40,000 less once its standardised norms are applied. Ashoka must report the client's NAV using the agency's figure, not its desk price. If the client later disputes the reported NAV, claiming the bond was overvalued, Ashoka cannot point to the empanelled agency and disclaim responsibility. The workbook is explicit that the ultimate responsibility for fair valuation remains with the portfolio manager, whatever pricing source it used.

Chapter 10 (Performance Measurement and Evaluation of Portfolio Managers), section 10.6, sits between performance attribution and due diligence, stating the empanelment and mandatory-use rule in three short sentences. Expect a recall question on who empanels valuation agencies, APMI, and who ultimately bears responsibility for fair valuation, the portfolio manager, not the agency.

• APMI empanels the agencies; the portfolio manager must use one or more of them. A manager cannot value debt securities independently.
• Responsibility for fair valuation is never outsourced. Using an empanelled agency does not shift accountability away from the portfolio manager.
• This rule covers debt and money market securities specifically. Equity valuation, priced off the exchange, is not what this section addresses.
• The workbook names no specific agencies or fees. Do not assume a figure that is not given.