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    CA Certification

    Net Worth Certificate for Bank Loan

    A chartered accountant's statement of what you own against what you owe, as at one date, drawn for the bank or NBFC that is reading your loan file. For the borrower on a business facility, the parent standing as co-applicant on an education loan, the joint holder of the security, or the guarantor on somebody else's borrowing.

    • UDIN on every certificate, checkable by the branch on the ICAI portal

    Written by Subham JhunjhunwalaReviewed by CA Sundram GuptaReviewed on Updated Sources: ICAI Guidance Note on Reports or Certificates for Special Purposes (Revised 2016), ICAI UDIN portal

    Whose position is the lender assessing?The request names a person and a role. The role decides whose records go in.
    • Borrower
      The person or entity taking the loan. Everything held in that name, against everything owed in that name.
    • Co-applicant
      Liable for the repayment, may own nothing. Certified on their own position, separately from the borrower.
    • Joint holder
      Owns a share of the security, may owe nothing. The jointly held asset enters at the share actually held.
    • Guarantor
      Answers personally if the borrower stops paying. Certified on everything in their own name, not the borrower's business.
    A bank manager explaining loan terms to a businessman across her desk in the branch

    In short

    What a net worth certificate for a loan is

    A net worth certificate for a bank loan is a chartered accountant's certified statement of one person's assets and liabilities as at one date, with the net figure, prepared for the lender named on it. The person is whoever the credit team is relying on: the borrower, a co-applicant, a joint holder of the security or a guarantor. Assets are stated on a disclosed basis, every borrowing and charge is set against the asset it secures, and the certificate carries a UDIN the branch can check without contacting you.

    It is one input into a credit file, not the file. It is not a credit appraisal and reaches no view on eligibility or sanction. It is not a valuation report: property and unlisted holdings are stated on a basis the certificate names, which the lender may accept, discount or value for itself. And it confirms no asset as free of charge beyond the records examined. For what a net worth certificate is in general, who issues one and how the figure is computed, see the net worth certificate page; for the reading a credit team gives the figure once it is in the file, see how a credit team actually reads the figure.

    Two documents, two questions

    Income proof asksCan you pay every month?

    Salary slips, returns and bank statements show the cash that will service the instalment. The credit team sizes the facility from them.

    The net worth certificate asksWhat stands behind the loan if you cannot?

    Assets after charges, in the name of whoever is liable. Where there is no security, or a guarantor is offered, this is the comfort the file rests on.

    Most unsecured facilities and every guarantor file ask for both, because one does not answer the other.

    Which loan file is it for?

    Which borrowers, co-applicants and guarantors are asked for one

    Find the file the request came with. Each card says what the credit team is weighing, whose certificate the request usually means, and what else sits beside it in the same file.

    Business loan or working-capital limit

    Term loan, cash credit, overdraft, limit renewal
    What the credit team weighs
    The borrowing entity and whoever stands behind it, usually both and usually separately. For an unsecured facility the certificate is the comfort; for a secured one it sits beside the valuation and the charge search. A renewal is read for movement against last year, so the certificate is drawn to the same basis as the previous one.
    Whose certificate
    The entity's own, from its accounts, plus a separate one for each promoter or partner whose personal means back the facility. The two are never added together: the promoter's capital in the firm would then appear on both sides of one total. The entity pages: Net Worth Certificate for Company, Net Worth Certificate for Partnership Firm, CA Certificate for Proprietorship Firm.
    Beside it in the file
    CMA data prepared and certified for the bank, and where the year is not yet closed, certified provisional financials. A working-capital limit is also sized on the monthly stock statement after margin money, with the credit team reading the debt service coverage ratio from the accounts, not from the certificate.

    Home loan and property finance

    Purchase, loan against property, second charge
    What the credit team weighs
    For a loan against the property being bought, the property itself is the security and is valued separately, so a separate net worth certificate is often not asked for at all. It becomes relevant where the borrower is self-employed, where the loan is against a property already held, or where the sanction is large enough that the branch wants the wider position behind the loan-to-value ratio.
    Whose certificate
    The borrower's, and where the property or the loan is held jointly, one each. A spouse added to the deed for succession is often a joint holder and not a co-applicant; a parent added to strengthen the application is often a co-applicant and not a joint holder. The certificate says which role the person occupies rather than leaving the branch to infer it. How the share is apportioned is explained in joint owner.
    Beside it in the file
    The lender's own valuation and title search. Where an earlier mortgage sits on the property, the certificate shows the outstanding balance against it, so what a second lender can look to is visible. Property is stated on a named basis, because the sale-deed value, the circle rate and the figure the branch's valuer reaches are rarely the same number.

    Co-applicant on a personal or education loan

    A parent, spouse or relative who shares the liability
    What the credit team weighs
    The co-applicant is liable for the repayment, so their position is assessed on its own merits. The student or the primary applicant may hold nothing; the file then rests on the co-applicant's statement, read alongside the sanction and, for an education loan, the admission letter.
    Whose certificate
    The co-applicant's own, covering everything in their own name: the house and the loan on it, deposits, investments, retirement balances, and any guarantee already given for somebody else. Education loans are the largest group of these requests, and they have their own section below.
    Beside it in the file
    The co-applicant's income proof and the lender's own net worth annexure where it has one. Where the lender asks for a bank guarantee instead of a co-applicant, that is a different instrument: a Bank Guarantee (BG) is the issuing bank's own promise, and the bank issuing it may ask for this certificate from you first.

    Guarantor or third-party security

    Standing behind somebody else's borrowing
    What the credit team weighs
    Whether this individual could meet the obligation if called on. A guarantee is a personal liability that survives whatever happens to the borrower, so the guarantor is assessed personally, on their own name, and the borrower's business accounts are irrelevant to that question however strong they look.
    Whose certificate
    The guarantor's own. Not everybody who supports a loan is a guarantor: a person who offers property as security without accepting personal liability is a third-party mortgagor, and may only need that asset evidenced and its title established. Branches use the two words interchangeably, so the security documents are read, not the covering letter. What a lender tests in a surety is set out in Guarantor Net Worth Requirements: What Lenders Check.
    Beside it in the file
    The guarantee deed and the guarantor's own loan statements. A guarantee already given for another person reduces what the guarantor can borrow themselves, which is why existing guarantees are asked about before a new one is certified.

    Education loans

    Co-applicant statements for education loans

    Education-loan lenders, the specialist NBFCs as much as the banks, ask for a certified net worth of the co-applicant as standard, because the student usually holds nothing and the co-applicant, almost always a parent, is the position the repayment rests on. The request arrives on the lender's checklist, sometimes as "net worth certificate of the co-applicant", sometimes as "net worth statement", sometimes as a prescribed annexure to be certified by a chartered accountant with a UDIN.

    Whatever the checklist calls it, it is the same document: a chartered accountant's certificate of the co-applicant's assets and liabilities as at one date, with the statement behind it, signed with a UDIN the lender's processing team checks on the ICAI portal. Where the lender issues its own annexure, that annexure is what is certified, and the supporting statement is attached to it.

    The same parent is often also the sponsor on the student's visa file. One set of records supports both, but the two certificates are drawn for their own readers, with the figures the consulate wants presented differently from the figures the lender wants, so one is never reused as the other.

    What goes on a parent's statement

    • The house, and the loan on itStated at a named basis, with the outstanding home-loan balance set against it, not netted away.
    • Deposits, investments and retirement balancesBank balances, fixed deposits, shares and funds, provident fund and similar balances, each from its own statement.
    • Every running loanVehicle, personal and credit-card balances. A lender finds them in the credit report anyway; the certificate shows them first.
    • Guarantees already givenA guarantee signed years ago for a relative's business is a contingent liability and belongs on the statement from the day it was signed.
    • The fee already paid, where askedSome checklists ask what has been remitted to the institution before disbursement; it is shown as the lender's format asks, not invented.

    During a moratorium the loan is still a liability on the co-applicant's later statements; a renewal or top-up request will ask for the position again as at a new date.

    How it is prepared

    How we prepare it, step by step

    Six steps, three of them yours. Nothing is drafted until the lender's request has been read, because the request decides whose records are examined.

    YouWe
    1. 1
      Send the lender's request as the lender wrote it

      The checklist, email or requirement letter, and the lender's own annexure if it issued one. It names the person, the role, the date and the format, and those four things are read from it, never assumed.

    2. 2
      We confirm whose position is certified, and on what basis

      Borrower, co-applicant, joint holder or guarantor: each is assessed differently, so this decides whose records are asked for. Where the file needs more than one person certified, each gets a certificate of their own.

    3. 3
      Produce the records, not a summary

      Title documents, statements, loan accounts and the papers for every jointly held asset. Each figure on the certificate is traced to the record that governs it, so a list of values with nothing behind it cannot be certified.

    4. 4
      We state values on a named basis and set every charge against its asset

      Property and unlisted holdings are stated on a basis the certificate names. Each mortgage, lien, pledge or hypothecation is checked against the record and shown beside the asset it sits on, so the certificate tells the same story the lender's own search will. A jointly held asset enters at the share actually held, with the basis for that share stated.

    5. 5
      Sign the written representation

      You confirm that every borrowing, every guarantee given for somebody else and every contingent liability has been disclosed. Undisclosed guarantees are the omission credit teams find most often.

    6. 6
      A chartered accountant signs and generates the UDIN

      A member holding a Certificate of Practice signs the certificate, in the lender's format where it has one, and generates the UDIN on the ICAI portal. The branch checks it there before the credit note is written.

    Documents

    What the lender adds to the usual documents

    The usual set for any net worth certificate, PAN, returns, bank and deposit statements, title documents, investment statements and loan statements, is listed on the net worth certificate page. A loan file adds the items below.

    Added for a loan file

    Each item is here because the lender reads something from it that the usual set does not show.

    1. The lender's request, as issuedChecklist, email or requirement letter

      Names the person, the role, the "as on" date and whether the lender's own annexure is to be used. Everything downstream is read from it.

    2. The lender's annexure or formatWhere the lender prescribes one

      Many lenders circulate a fixed layout with their own asset heads and declaration paragraph. That layout is what gets certified; the detailed statement is attached behind it.

    3. The sanction letter or application referenceLoan account or application number

      Ties the certificate to the file it is issued for. The certificate names the lender and the purpose, so reliance is limited to that use.

    4. Statements and sanction letters for every running loanHome, vehicle, personal, business, credit cards

      The outstanding balance is shown against the asset it secures. The lender reads the instalment burden separately from the same papers.

    5. Papers for each jointly held assetDeed, agreement or funding trail

      Fixes the share each holder actually has. Where the instrument names the shares, that governs; where it does not, the funding trail is what is cited.

    6. Identity and relationship of a co-applicant or guarantorPAN, address proof, the relationship to the borrower

      The certificate states the capacity in which the person is certified, and the lender matches it to its own KYC.

    7. Existing guarantee deeds and charge documentsGuarantees given, charges already created

      Shown as liabilities and charges before the lender's own search finds them. An encumbrance certificate helps for property, though a mortgage by deposit of title deeds may leave no trace in it, so the lender's own confirmation is asked for as well.

    What the lender receives

    The format your lender receives

    Searches for a format or a sample usually want to know what the document will say. What a lender receives has three parts, and if the lender has its own annexure, the first part is replaced by that annexure.

    Part 1

    The certificate page

    • Addressee and purpose the lender and branch, the loan application or account, and the purpose, so reliance is limited to that reader and that use
    • The person certified full legal name, PAN and the capacity: borrower, co-applicant, joint holder of the security or guarantor
    • The figure and the date net worth as at the stated date, in figures and words, as the net of the statement in Part 2
    • The basis the records examined, the written representation obtained, and the guidance the certificate is issued under
    • The limitation an opinion on the records produced as at that date; not a valuation, not an appraisal, no view on any later date
    • Signature and UDIN the chartered accountant's signature, membership and firm numbers, place, date and the UDIN for this document
    Part 2

    The statement of assets and liabilities

    The statement of affairs behind the figure, head by head, each with the basis it is stated on:

    • Assets immovable property; bank balances; fixed and term deposits; shares, funds and bonds; retirement balances; vehicles; other assets, each at a named basis
    • Liabilities each loan at its outstanding balance, overdraft drawn, credit-card balances, other dues, and any tax demand already raised
    • Net worth assets less liabilities, the figure carried to the certificate page

    A lender that works from ratios, a debt-to-equity ratio for an entity, for instance, computes them from this statement, not from the certificate page.

    Part 3

    The schedules

    • Charges against assets each asset held as collateral for an existing facility, the lender holding the charge and its nature, so the free position is visible rather than inferred
    • Jointly held assets the share entered and the instrument or trail that fixes it
    • Guarantees and contingent liabilities guarantees given for others and obligations that may fall due, listed with the amount and the beneficiary
    • Assets free of charge where the lender's format asks for it, the assets that carry no charge, stated as a separate figure

    If the lender has its own template. Many lenders issue a prescribed annexure with fixed heads and a declaration paragraph, and the processing team will not accept a substitute layout. The annexure is filled and certified as the lender wrote it, Parts 2 and 3 are attached behind it, and the verification work is the same. There is no format to download here because the person, the date and the lender's own layout change with every certificate.

    Verification

    How the lender checks the certificate

    The processing team enters the UDIN printed on the certificate on the ICAI UDIN portal and sees the signing member, the date it was generated and the type of document, without contacting you or us. Every certificate a practising chartered accountant has issued since 1 February 2019 carries one, so a certificate without a UDIN is not read as a chartered accountant's certificate at all. Some lenders also ask that the signatory hold a current Certificate of Practice, which the same portal confirms.

    • Which member signed it
    • The date the number was generated
    • The kind of document it belongs to

    Scope

    What the certificate covers and what it does not

    A credit team does not take the certificate on trust. It runs its own charge search, reads the credit report and has the property valued. The certificate is drawn to what those checks will find, which is why it differs from the figure most applicants first declare.

    A property at its full valuewith the loan on it left out
    The charge, in its own search of the charge records before sanction. The omission costs more credibility than the asset adds.
    The property on a named basis with the outstanding balance set against it, so the free position is visible, not inferred.
    A value from what neighbours are askingfor a flat or a plot
    The panel valuer's figure, worked from recorded transactions and usually lower. A figure the branch cannot support is discounted in the appraisal note without a query.
    A stated basis the valuer can stand behind, named on the certificate rather than left for the branch to reconstruct.
    A jointly held flat in fullon one person's statement
    The other holder's share in the deed. An asset entered in full on two separate certificates is the commonest error in joint applications, and both documents are discounted.
    The share actually held, with the instrument or funding trail that fixes it, so two certificates read side by side sum to the whole.
    A guarantee signed years agofor a relative's business, forgotten
    The guarantee in the credit information report or in the other lender's records. Undisclosed guarantees are the omission credit teams treat most seriously.
    Listed as a contingent liability with the amount and the beneficiary, after you confirm it in the written representation.
    Borrowings from relatives left outbecause nothing is documented
    The transfers, in its scrutiny of the bank statements. Informal borrowings compete for the same repayment capacity as the proposed loan.
    Every liability, documented or not, at the outstanding principal. Future instalments are not a present liability; the lender reads the instalment burden separately.

    What the certificate does not do

    • No view on sanction. It states a position; eligibility, margin and the facility size are the lender's own decisions.
    • No valuation. Property and unlisted holdings are stated on a named basis, which the lender may accept, discount or value for itself.
    • No clearance beyond the records. It confirms no asset as free of charge beyond the charges disclosed in the records examined.
    • No later date. It speaks as at the date named. How recent the lender wants it is the lender's own policy: the certificate speaks to a stated date, and the lender decides how recent that date must be. A later date is a fresh certificate on updated records, never a re-dating of the first.

    Professional basis

    The professional basis

    No banking statute prescribes the form of a net worth certificate. What governs it is the professional framework a chartered accountant issues it under, and the number that lets the branch check it.

    Guidance

    ICAI Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)

    The guidance a chartered accountant follows when certifying financial information for a named purpose and reader: what is examined, the written representation obtained from you, and how the basis and the limitation are stated on the certificate. A certificate for a lender is a certificate for a special purpose, which is why it names its reader and limits reliance to that reader.

    Verification

    UDIN on every certificate since 1 February 2019

    The Unique Document Identification Number is generated by the signing member on the ICAI portal for each certificate, and the lender checks it there. The ICAI made it mandatory for all certificates issued by practising members from 1 February 2019. It identifies the document and its signatory; it says nothing about the figures, which rest on the records and the representation.

    Fee

    Fee

    One fee for one person's certificate as at one date, quoted in writing once the lender's request and the records are known. Exclusive of GST and government charges.

    Fees are indicative until confirmed in writing for your engagement. The final fee depends on the records to be examined. What a chartered accountant charges for a net worth certificate in general is answered on the net worth certificate page.

    • More than one person certifiedBorrower, co-applicant and guarantor each receive their own certificate, prepared from the same records and quoted together.
    • The lender's own annexureFilling a prescribed layout and attaching the statement behind it is part of the engagement, not an extra.
    • Charges to trace, shares to apportionSeveral properties, charges to verify against the record or jointly held assets to apportion widen the scope, and the fee is quoted on that scope.
    • A later dateA revised sanction or a renewal wants the position as at a new date: a fresh engagement on updated records, never a re-dating of the first.

    Related certificates and guides

    Related certificates and guides

    A lender's checklist sometimes names a different certificate, or asks for two. These are the ones that sit closest to this page, and the terms the sanction letter will use.

    When no lender has named a reader

    Net worth certificate

    The general certificate: what it is, who issues it, how the figure is computed, the usual documents and the fee.

    Asked for with a business facility

    CMA data preparation and certification

    The projected financials and ratios a bank's credit team sizes a term loan or working-capital limit from, prepared and certified for the lender.

    For an entity rather than a person: company, partnership firm or proprietorship.

    Estimate the figure first

    Net Worth CalculatorAssets less liabilities for an individual, the way a statement lays them out. An estimate carrying no UDIN. Open the full calculator ↗Company net worth from the balance sheet, for an entity borrower.

    Terms your sanction letter will use

    Short definitions, each with what it means for the certificate.

    Security over your assets
    What the credit team computes
    Instruments and the file

    Start your certificate for a loan

    Start your certificate for a loan

    Send the lender's request as the lender wrote it. A CA reads it, confirms whose position the credit team wants certified and tells you which certificates the file needs before any work starts.

    • Have readyThe lender's checklist or requirement letter, and its annexure if it issued one.
    • KnowWho the request names, and in which role: borrower, co-applicant, joint holder or guarantor.
    • NoteThe "as on" date the lender wants, if it has set one.

    Prefer to chat?

    Send the lender's request on WhatsApp and a CA replies with what the certificate will need.

    What happens next. A CA reads the request, confirms whose position is to be certified, lists the records needed and sends the fee in writing before the engagement starts.

    Or call and write

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