Quarterly Inventory Statement for Banks: How MSME Borrowers Should Prepare ItPreparing the quarterly return the bank and the auditor both read
Working capital limits
Stock Statement Certificate for CC and OD Limits
A stock statement is the periodic statement a borrower gives the bank listing the stock, and usually the book debts and creditors, behind a cash credit or overdraft limit. A stock statement certificate is a Chartered Accountant's certificate on it: the CA agrees the figures with your books and records, states what was and was not checked, and signs it so the bank can rely on it when it sets your drawing power. For borrowers whose sanction letter asks for a certified statement every month or quarter.
- 7+ years in practice (since 2019)
- Reports reviewed and signed off by a Chartered Accountant
Certificate at a glanceWhat is certified, who asks, what you receive
Starting from ₹1,999 per monthQuoted on the statement frequency, the number of locations and whether book debts are included
Quote after scoping- What is certifiedThe stock, book debts and creditors in your statement, as agreed with the books, the stock register and the ledgers on the statement date
- Who asks for itThe bank that sanctioned your cash credit or overdraft limit, through the conditions in the sanction letter
- What you getA signed certificate on the statement in the bank's layout, each period, with what was examined and what was not; reviewed and signed off by a Chartered Accountant
- Where it is availableAvailable across India, delivered through local field teams coordinated by Patron.
A stock audit ordered by the bank is a separate engagement and is quoted on its own.
In short
What a CA-certified stock statement is and when a bank asks for one
A bank does not let you draw your whole cash credit limit at will. It lets you draw up to the drawing power, and the drawing power is worked out from the stock and debtors you declare in the stock statement. The statement therefore decides how much of the limit you can actually use, which is why the bank wants the figures to be reliable.
Many banks ask for the statement to be certified by a Chartered Accountant above a limit set in their own credit policy, while smaller limits may accept the borrower's own declaration. Where certification is required, the sanction letter says so, along with how often the statement is due, usually monthly on a cash credit limit and sometimes quarterly for small limits.
Statement, drawing power and certificate
- Stock statementYour own statement of stock, book debts and creditors on a date, in the layout the bank uses. It secures the cash credit limit.
- Drawing powerThe amount you may draw at that date: eligible stock and debtors, less creditors for goods and the margins in your sanction letter, capped at the sanctioned limit.
- Stock statement certificateThe CA's signed confirmation that the statement agrees with the books and records examined, with what was checked and what was not.
Why the certified figures matter later
- The statutory auditUnder CARO 2020 clause 3(ii)(b), where working capital limits above Rs 5 crore in aggregate are sanctioned on current-asset security, the auditor reports whether quarterly returns to banks agree with the books.
- The bank's stock auditWhen the bank's auditor visits, the first test is whether the statement agrees with the books and with what is on the floor.
- Account healthUnder RBI's asset-classification directions, drawing power based on a stock statement older than three months is treated as irregular.
Statements prepared carefully every period make all three routine. The stock behind them is your primary security.
The document
What the certificate looks like
Layouts differ from bank to bank, but most carry the parts below. Every value is shown as X.
| Part | Typical content |
|---|---|
| Heading | Statement of stock and book debts as on XX-XX-XXXX; borrower, branch, account number and sanctioned limit |
| Stock by category | Raw material, work in progress, finished goods, stores and spares: quantity and value XXXX |
| Less: stock not eligible | Obsolete, slow-moving, damaged or third-party stock: XXXX |
| Less: creditors for goods | Unpaid suppliers of the stock declared: XXXX, giving paid stock XXXX |
| Book debts by age | Within the age limit in the sanction letter: XXXX; older debts shown separately: XXXX |
| Drawing power and outstanding | Paid stock and eligible debts less the margins: XXXX; balance in the account on the same date: XXXX |
| Insurance | Policy number, sum insured and expiry date: XXXX |
| The CA's certificate | What was examined and its limits, signature, membership number, firm registration number, UDIN, place and date |
The certificate states what the CA checked, such as agreement with the books, the stock register and the debtor and creditor ledgers, and what was not checked, such as a physical count. That limit is what separates it from a stock audit.
Each period
How certification runs each period
The same six steps repeat every month or quarter, so the second cycle is quicker than the first.
- 01Close the periodYou, after the period end
Post purchases, sales, production and returns up to the statement date, so the books show the closing stock, debtors and creditors.
- 02Prepare the statementYou
Take closing stock from the stock register or ERP and debtors and creditors from the ledgers, all for the same date, in the bank's layout.
- 03Apply the sanction termsYou, with the CA
Leave out what the bank does not count: stock at undeclared places, obsolete or slow-moving stock, debts beyond the age limit, and uncovered stock with job workers. Deduct creditors for goods.
- 04The CA's checkCA
The figures are agreed with the books and registers, the valuation basis and the exclusions are tested, the debtor ageing is reviewed and the insurance cover is compared with the stock.
- 05Sign and generate the UDINCA
The CA signs the certificate and generates its UDIN on the ICAI portal; the bank can check the UDIN there.
- 06File on timeYou
The certified statement goes to the bank within the window in your sanction letter, often a few weeks after the period end. Turnaround: How long the report takes depends on the scope and the team needed, and is confirmed with your quote.
What we need from you
Information needed each period
Each item below is asked for because the sanction letter or the accounting standard turns on it.
01
Closing stock by category and location, quantity and valueThe main figure being certified
02
Valuation basisUnder AS 2 and Ind AS 2, inventory is carried at the lower of cost and net realisable value
03
Stock ageing and lists of damaged, expired or slow-moving itemsMany banks leave such stock out, using ageing cut-offs from their own policy
04
Debtor ageingBanks usually count book debts only up to an age limit in the sanction letter, often 90 days
05
Creditors for goodsMost banks work on paid stock, so trade creditors for the stock are deducted
06
Stock with job workers and in transitUsually left out unless the sanction letter or hypothecation agreement covers it
07
Insurance policyMost banks count only paid, adequately insured stock, as the sanction letter sets out
08
Locations declared to the bankStock at a place not declared under the hypothecation agreement usually does not count
09
Sanction letter and the account balance on the same dateThe letter sets frequency, layout, margins and exclusions; the balance is compared with the drawing power
From statement to limit
How drawing power is worked out
Margins are set in your sanction letter and vary by bank and industry; around 25% on stock and 40% on debtors is common. To run your own figures, use the stock statement template and drawing power calculator.
| Step | What happens |
|---|---|
| 1. Stock as per books | Total stock on the statement date, by category |
| 2. Less stock not eligible | Obsolete, slow-moving, third-party, undeclared-location and uncovered job-work stock |
| 3. Less creditors for goods | Gives paid stock |
| 4. Less the stock margin | Gives drawing power on stock |
| 5. Eligible book debts less the debtor margin | Gives drawing power on debts, counting only debts within the age limit |
| 6. Add steps 4 and 5 | Drawing power, capped at the sanctioned limit and compared with the outstanding balance |
Banks treat work in progress differently: some leave it out of drawing power, others include it at a higher margin set in their credit policy. Your sanction letter decides which applies.
What goes wrong
Common issues in stock statements, and how to fix them
Most problems a certificate runs into start in the books, before the statement is drawn up.
| Issue | Effect | Fix |
|---|---|---|
| Statement drawn from estimates, not the closed books | Figures that do not agree with the books; remarks from the stock auditor and the statutory auditor | Close the books for the statement date first |
| Stock valued at selling price | Drawing power overstated | Value at the lower of cost and net realisable value |
| Creditors for goods not deducted | Drawing power claimed on stock not yet paid for | Deduct creditors for goods as the sanction letter requires |
| Old debts included | Drawing power overstated | Show debts beyond the age limit separately |
| A new godown not declared to the bank | Stock there does not count | Have the location added to the hypothecation agreement |
| Different figures to the bank and in the quarterly returns | A CARO 3(ii)(b) remark and questions from the bank | Use one set of closing books for both |
Why a lapsed statement is a problem
Under RBI's asset-classification directions, drawing power based on a stock statement older than three months is treated as irregular. Filing a certified statement on the date in your sanction letter, every period, keeps the drawing power current. For how quarterly returns are prepared, read quarterly inventory statement for banks.
Not the same check
Stock statement certificate compared with a stock audit
Both concern the stock behind a working capital limit. One certifies your own statement against your books; the other is the bank's independent check of the stock itself.
| Point | Stock statement certificate | Stock audit |
|---|---|---|
| Who appoints the CA | Usually the borrower | The bank |
| How often | Each period the sanction letter sets, often monthly or quarterly | Usually quarterly or half-yearly, or as the sanction letter says |
| Physical count | Normally not; figures are agreed with books and records | Yes, the core of the work |
| Output | A certificate on the statement | A stock audit report to the bank |
| Purpose | Lets the bank set drawing power from reliable figures | Independent check that the declared stock exists and is valued correctly |
Related checks
Stock audit
A stock audit covers one asset class, is commissioned by a lender rather than required by the Companies Act, reports to that lender and gives no opinion on the accounts. If your bank has asked for a count, see stock audit.
Statutory audit
The audit of the full accounts, in which the CARO 3(ii)(b) answer on quarterly returns appears. It is a separate engagement by the company's statutory auditor.
Fees
What the certificate costs
A certification is quoted for the frequency your sanction letter sets, once the locations and the scope of the statement are known.
Professional fee
Starting from ₹1,999 per month Shown once the fee and its billing period are confirmedThe quote covers the CA's check of the statement against your books each period and the signed certificate. It moves with the frequency and the work in your books, not with the size of your limit.
Turnaround: How long the report takes depends on the scope and the team needed, and is confirmed with your quote.
Fees exclude GST and government charges. All fees listed are indicative only and do not constitute a binding offer; the final amount is confirmed after a scoping review and depends on the volume of work and the complexity involved.
What moves the cost:
- How often the statement is certifiedMonthly certification is twelve cycles a year; quarterly is four
- The number of locations and stock categoriesEach godown and category is a separate set of figures to agree
- Whether book debts and creditors are includedAgeing and creditor checks add work to a stock-only statement
- The state of the books at each period endBooks closed on time make the check shorter
- Extra checks the bank's layout asks forSome layouts ask for more schedules than others
Who signs
Who signs the certificate
Every certificate is reviewed and signed off by a Chartered Accountant. The regulatory and banking statements on this page are signed off by a named person.
Reviewed and signed off by a CAContent reviewed by Subham Jhunjhunwala, CA Finalist; regulatory and banking statements signed off by CA Sundram Gupta.
7+ years in practice (since 2019)In practice since 2019; each certificate is checked against the books before it is signed.
Whether and where it is offeredAvailable across India, delivered through local field teams coordinated by Patron.
Sources used on this page
- Reserve Bank of India, Income Recognition, Asset Classification and Provisioning Directions, 2025 (stock statements older than three months)
- Ministry of Corporate Affairs, Companies (Auditor's Report) Order, 2020, clause 3(ii)(b)
- ICAI, Unique Document Identification Number (UDIN) for certificates, from 1 February 2019
- Accounting Standards AS 2 and Ind AS 2 (inventories)
Statements about frequency, margins, ageing, creditors, insurance, locations and exclusions describe common bank practice; your sanction letter decides how they apply to you.
Read next
Guides, a calculator and terms
Stock Statement Template & Drawing Power CalculatorA bank layout to fill in, and your drawing power worked out
Terms used on this page
Before you enquire
Have your bank's name, the frequency in your sanction letter and the number of stock locations to hand. The form at the end of this page asks for exactly those.
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Ask for a certificate
Share your bank, the statement frequency in your sanction letter and the number of stock locations, and you will receive a quote and the list of information needed each period.
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What happens next
A CA reads your request, confirms the bank, the frequency and the scope of the statement, and sends the fee and the information list in writing before the first period is taken on.