Net Worth & Solvency Certificate

What are net worth and solvency certificates?

A net worth certificate states the value of a person's or entity's assets minus liabilities on a given date, certified by a chartered accountant. It's commonly asked for in visa applications, tenders, contractor registrations, bank loans, and some regulatory registrations.

A solvency certificate confirms financial soundness up to a stated amount. It's usually issued by a bank based on the customer's relationship and assets, and in some states by revenue authorities based on property. A CA's net worth certificate often supports the application.

The key terms

What goes into the certificates:

Net worth

Total assets minus total liabilities, on the certificate date.

Valuation basis

Assets are valued at cost, market value or a stated basis, which the certificate discloses.

Individual vs entity

Individuals include personal assets; companies use the balance sheet and adjustments.

Supporting documents

Bank statements, property valuations, investment statements and loan statements.

UDIN

The Unique Document Identification Number every CA certificate must carry, verifiable on ICAI's portal.

Solvency certificate

A bank or authority's confirmation of solvency up to an amount, often for tenders.

Date and purpose

Certificates are for a specific date and purpose, and may have limited validity.

Why it matters

These certificates are checked closely:

Visa decisions

Embassies assess financial capacity from these documents.

Tender eligibility

Minimum net worth or solvency is a common tender criterion.

Contractor registration

Government departments grade contractors partly on solvency.

Regulatory registrations

Some licences and registrations require minimum net worth.

Verification

UDINs let recipients verify certificates, so they must be accurate.

Fraud risk

Inflated certificates can lead to rejection and legal consequences.

Guarantor assessments

Banks assess guarantors' net worth before lending.

Who is this for?

We certify only what documents support. Values we can't verify are excluded or disclosed as such.

Net worth vs solvency certificate

How they differ:

What we'll need from you

Bank statements

Balances on or near the certificate date.

Investments

Statements for fixed deposits, mutual funds, shares and insurance.

Property

Title documents and a valuation where market value is used.

Liabilities

Loan statements and other liabilities.

Financial statements

For businesses, the latest audited accounts.

Purpose

The recipient's required format, if any.

Fees depend on the number of assets and whether valuations are needed.

How we issue certificates

Our approach:

1. 1

   Understand the purpose

   We check the recipient's format and requirements.

2. 2

   Collect documents

   Asset and liability documents are gathered.

3. 3

   Verify

   Balances and values are checked against source documents.

4. 4

   Value

   Assets are valued on the disclosed basis, using valuer reports where needed.

5. 5

   Prepare

   The certificate is drafted with schedules and the valuation basis.

6. 6

   Issue

   It's signed, UDIN generated, and issued.

After the certificate

Keep in mind:

Validity

Recipients often want certificates dated within a few months.

Updates

Get a fresh certificate if values change significantly.

Verification

Recipients may verify the UDIN.

Consistency

Keep figures consistent with tax returns and financial statements.

Originals

Keep supporting documents for queries.

Bank certificates

Get bank solvency certificates in time for deadlines.

Benefits and responsibilities