CA India Ankit Shah and Co.Chartered Accountants WhatsApp us
CA IndiaAnkit Shah and Co.
ICAI Peer Reviewed · FRN 107147
CallWhatsApp us
Project Finance

The net worth certificate: what a bank is really asking a CA to sign

A net worth certificate is a CA's signed statement of what you own minus what you owe on one date — and the bank relies on it to judge how much of your own money stands behind a loan, so every figure in it has to be one you can explain.

CA Ankit Shah By CA Ankit Shah · B.Com., F.C.A., DISA(ICAI) 26 October 2026·6 min read·ગુજરાતીમાં વાંચો
In this articleWhat is a net worth certificate?How to calculate net worth: the formulaNet worth certificate format: what goes inWho issues a net worth certificate, and what the bank checksMistakes that send the certificate backKey points
In brief
  • Net worth is a simple subtraction: everything you own (at a defensible current value) minus everything you owe, on one stated date. It is not your business turnover and not your profit.
  • The certificate is a CA's signed statement, not a form you fill in yourself. Under ICAI rules a net worth certificate for bank finance carries a UDIN, which the bank can check on the UDIN portal.
  • For a proprietor, the business enters as one line — the capital account in the balance sheet. The shop, stock and debtors are not listed a second time.
  • Banks check three things: that each asset is yours, that the value is supportable, and that no liability is missing. A certificate that fails any one comes back.
Assets minus liabilities = net worth Illustrative proprietor, Surat · position as on 31 March 2026 · ₹ in lakh 0 50 100 150 151.0 29.0 122.0 Assets owned Liabilities owed Net worth − = What is inside the assets Flat, Adajan62.0 Shop (self-owned)28.0 Capital in business35.0 Gold jewellery8.5 Bank deposits6.5 Vehicle7.0 LIC surrender value4.0 What is inside the liabilities Home loan outstanding24.0 Vehicle loan outstanding3.5 Credit card, other dues1.5 Business loans are not repeated here: they are already netted inside the capital account.
Net worth is the third bar: ₹151.0 lakh owned, less ₹29.0 lakh owed, leaves ₹122.0 lakh — for a Surat textile trader, as on 31 March 2026 (illustrative figures).

A Ring Road textile trader applies for a ₹40 lakh term loan. The bank's reply is short: "Please submit a net worth certificate of the proprietor, certified by a Chartered Accountant, as on a recent date." He assumes this is a form to fill in. It is not — it is a statement the CA signs, and the CA will only sign what the documents support.

What is a net worth certificate?

A net worth certificate states what a person (or firm) owns and owes on one date, and the difference between the two. The bank uses it for one question: how much of the borrower's own money stands behind this loan? It is also asked for from the people who give personal guarantees, which is why a partner, a director or a guarantor's spouse may need one too.

In plain terms: it is a snapshot, not a year's result. Example: a trader with ₹6 crore turnover and ₹4 lakh profit can still have a strong net worth if he owns a flat and a shop with little debt on them — and a trader with ₹20 crore turnover can have a thin one if everything is mortgaged.

How to calculate net worth: the formula

Net worth = total assets − total liabilities, as on the certificate date. The picture above works it through for an illustrative Surat proprietor: ₹151.0 lakh of assets, ₹29.0 lakh of liabilities, net worth ₹122.0 lakh.

In plain terms: put everything you own in one column, everything you owe in another, subtract. Example: a flat in Adajan worth ₹62 lakh with ₹24 lakh of home loan still outstanding contributes ₹38 lakh to net worth — not ₹62 lakh, and not ₹24 lakh.

Three points where the arithmetic goes wrong in practice:

  • The date. Banks usually want a recent date, often tied to the latest balance sheet or to within the last few months. A certificate as on 31 March 2025 handed over in October 2026 is usually refused.
  • The value. Land, buildings and gold are normally shown at a current market value you can support — a registered valuer's report, a recent sale in the same society, the day's gold rate — rather than the purchase cost. Many bank formats specify which basis they want, so use the bank's own format where one is supplied.
  • The business. For a proprietor, the business appears once, as the capital account in the balance sheet. Listing the stock, machinery and debtors again on top would count the same money twice.
Same formula, different business line Proprietor Partner in a firm The business line Capital account in the proprietorship's balance sheet. One line, not the stock and debtors behind it. The business line The partner's own capital and current account balance in the firm's balance sheet — not the firm's total assets. Personal assets and dues Flat, shop, gold, deposits, vehicle, LIC — less home loan, vehicle loan, other dues. Personal assets and dues Same items as a proprietor — only what is in the partner's own name. Business loans Already inside the capital account. Do not subtract them a second time. Guarantees given for the firm Not a deduction, but disclosed separately as a contingent liability. A company director is different again: shares held are valued on the company's net worth, and the company's own assets are never listed as the director's.
How the business enters the certificate for a proprietor and for a partner.

Net worth certificate format: what goes in

There is no single format fixed by law. Most banks send their own, and where they do not, a CA uses a format in line with ICAI's guidance on certificates for special purposes. The usual parts are: the name and PAN of the person; the date; a schedule of assets with the basis of value; a schedule of liabilities; the net worth; a note on the documents relied on; and the CA's signature, membership number, firm registration number and UDIN.

In plain terms: each line should be backed by a paper. Example: for the flat — a registered sale deed and a recent valuation; for the deposits — the bank statement or FD receipt; for the home loan — the lender's outstanding statement; for the capital account — the audited or latest signed balance sheet.

The CA is not creating your net worth. The CA is confirming that the figures you give are supported by documents.
In, and out: a checklist before the CA signs Goes in — if it is yours and provable Stays out, or needs care ✓ Self-owned flat or shop, at supportable value ✓ Fixed deposits and bank balances ✓ Gold, at the day's rate ✓ Life insurance, at surrender value ✓ Capital account in the business ✓ Every loan and due, home to credit card ✗ Assets in a spouse's or parent's name ✗ Stock and debtors on top of the capital ✗ A value with no valuer or document ✗ Leaving out a loan from a friend or relative ✗ A date many months old ✗ A round number nobody can explain Rule of thumb: if the bank's officer asks "show me the paper for this line" and you cannot, the line should not be in the certificate.
Lines that go into a net worth certificate, and lines that bring it back.

Who issues a net worth certificate, and what the bank checks

The certificate is issued by a practising Chartered Accountant. ICAI requires a UDIN (Unique Document Identification Number) on certificates of this kind, including net worth certificates for bank finance, and the bank can check the number on the UDIN portal. In plain terms: the UDIN is the certificate's serial number on ICAI's records. Example: a loan officer in Surat can confirm in a minute that the certificate on his desk was really issued by that CA and has not been altered.

A credit officer reads the certificate against what he already has. He checks that the capital account matches the balance sheet in the project report; that the assets listed match the property papers and the security offered; and that the liabilities match what appears on your CIBIL report. A loan on your credit report that is missing from the certificate is the commonest reason a certificate is sent back — which is why the CIBIL article is worth reading before you give the CA your list.

The certificate also feeds the promoter's own contribution: the bank compares net worth with the margin money it expects you to bring, covered in margin money and promoter contribution.

Not sure which of your assets belong in the certificate, or what value the bank will accept?

WhatsApp us

Mistakes that send the certificate back

  • Double counting the business. Capital account plus stock plus machinery. Plain terms: you are counting the same ₹35 lakh twice.
  • Using purchase cost for property bought long ago. A flat bought for ₹38 lakh in 2015 and worth ₹62 lakh today is understated by ₹24 lakh if cost is used — unless the bank's format asks for cost.
  • Forgetting a liability. A personal loan, a credit-card balance, a loan from a relative. These reduce net worth; leaving them out inflates it.
  • Including what is not yours. A house in your father's name does not belong in your net worth, however likely you are to inherit it.
  • An old date. Ask the bank which date it will accept before the CA prepares the schedule.

Key points

  • Net worth = assets − liabilities, on one date.
  • The CA signs what documents support; each line needs a paper behind it.
  • The business enters once, as the capital account.
  • The certificate carries a UDIN, which the bank can verify.
  • Match the certificate to the balance sheet and CIBIL report before submitting.

Sources

  1. Institute of Chartered Accountants of India, UDIN — Frequently Asked Questions, listing net worth certificates (bank finance, bank guarantee) among certificates that require a UDIN.
  2. Institute of Chartered Accountants of India, UDIN mandatory w.e.f. 1 February 2019 for all certificates.
  3. Institute of Chartered Accountants of India, Comprehensive Guidelines on UDIN.
  4. Institute of Chartered Accountants of India, Auditing and Assurance Standards Board, Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) — illustrative formats for certificates given to banks.

This article is general information, not professional advice. Rules change; verify current provisions or contact the office for advice on your situation.

Further reading

Project FinanceVajpayee Bankable Yojana: a Gujarat subsidy for your first ventureProject FinanceProject report for a bank loan: what the credit officer checks in each sectionProject FinanceLoan sanction is not disbursement: the weeks in between, and what happens in them

Discuss your situation

A short call is usually enough to tell you what you need.

WhatsApp us More articles