Solvency Certificate - Meaning, Issuance & Format

A solvency certificate is a document showing the financial stability and credibility of an organization/individual/entity.

 

What is a solvency Certificate - Definition 

A solvency certificate is required when an individual/organisation or entity can not meet its responsibilities. A solvency certificate is proof that stands for financial credibility. To receive this certificate, an individual's or organisation's financial stability is mandated. 

 

Banks frequently offer solvency certifications using chartered Accountant reports and bank account transactions. The solvency certificate is issued without any cost to the person aiming to receive solvency certification. Individuals/entities or organisations have no burden or risk when furnishing it, whether as a customer or not. In most cases, the revenue department and banks offer these certificates in response to a request from an individual or entity according to the guidelines of the solvency certificate RBI measures.

 

A solvency certificate is directed by the government and commercial offices to get the financial position of individuals/entities. A solvency certificate can be required for the below-mentioned reasons:

 

  • Applying for tenders 
  • Obtaining Contracts 
  • Legal Matters
  • Visa Interviews

 

Format of Solvency Certificate

Solvency certificates are formal documents from chartered accountants that include details on the financial stability of an individual/organization. This bank solvency certificate format is essential for business officials and the government to know about a person's or organization's financial position. A chartered accountant or a bank issues it.

 

APPLICATION FORM FOR REGISTRATION OF CONTRACTORS/CIVIL/ELECTRICAL WORKS.

 

  1. Name of the Firm: …………………………………………………………………………………………………..

 

  1. Name of the Partner(s)/Proprietor/Director(s): ………………………………………………………..

…………………………………………………………………………………………………………………………………………

                                                                

  1. Name of the Contact person: …………………………………………………………………………………………..

 

  1. Address of the Firm: ………………………………………………………………………………………………………….

                                   ………………………………………………………………………………………………………….         

 

  1. Telephone Nos. (Office):………………………………………… 6.Cell Phone Nos. : ……………………………..

 

  1. Email: ……………………………………                                        8. Website ID  : (If any)…………………….

 

  1. Residential Address:    …………………………………………………………………………………………………..

……………………………………………………………………………………………………..

  1. PAN/TAN No.          :…………………………………………………………………………………………………………     

 

  1. Service Tax No.    :…………………………………………………………………………………………………..

 

  1. VAT No.           :…………………………………………………………………………………………………..

 

Place of Business:  ....................................................................... ………………………….

Name of the Banker with address:  ..................................................................................

  1. Is the Individual/any Partner/Sole Proprietor/Director of the/firm company:
  2. a) Discharged Government Servant:   

 

  • Yes ........     
  •  No .......

 

  1. b) Removed from an approved list of contractors: 

 

  • Yes .......
  • No .......

 

  1. c) Downgraded to a lower class of contractors:   

 

  • Yes .....    
  • No ......

 

  1. d) Having business prohibited/suspended by any Government in past:   

 

  • Yes ......   
  • No ......

 

  1. e) Sentenced by Court of Law:   

 

  • Yes...     
  • No…

 

  1. f) Ever blacklisted by any organization:   

 

  • Yes .....       
  • No .....

 

I affirm that the above-mentioned details are true and accurate as per my/our understanding. We shall have all original documents for validation & when directed.

Date & Place :

Name & Signature of the authorized signatory with a seal :

 

Annexure -B

 

FORMAT FOR SOLVENCY CERTIFICATE

(To be allocated by a Nationalized Schedule Bank)

 

 Reference No._____________________                                           Dated:         

          

TO WHOMSOEVER IT MAY CONCERN

 

This is to certify that M/s. __________________ holding their office at ______ ______are a frequent customer of our bank. They are solvent to a limit of____________    Rs._________ _______________(Rupees_______________________________________ only). The nature of the Account is fine.

 

It is certified that this certificate is issued without any risk and responsibility on the part of this Bank or any of its officials in any respect whatsoever, more particularly either as guarantor or otherwise. This certificate is allocated at the precise request of the customer.

 

(Signature, Name & Designation of allocating    management with Seal)



Issuance of Solvency Certificate

The revenue department & banks issue a solvency certificate in response to a request. This certificate is generally given based on the account transaction and property papers furnished to them. 

A report from a chartered accountant certifying the financial position of the person/entity/organization also assists in receiving the solvency certificate from banks.   

 

Required Documents By a Bank to Issue a Solvency Certificate

 

Application Form - Banks generally provide pre-specified application forms to be filled by the customer seeking a certificate. 

 

Income Tax Returns - Banks also ask for income tax returns for numerous years to understand the financial position of applicants.

 

Address Proof - You should also be ready with the current address proof. You will be instructed to provide current address proof while applying for solvency certification.

 

Bank (savings/current) Statements - The solvency certificate is only issued to those who deal in the transactions of the bank for specific years. The bank officials will rectify the bank statement (savings/current bank account) to understand the financial position.

 

Property Documents - Property documents are considered foremost to analyze your possessions. Individuals/entities or organizations who own properties like buildings/land can furnish their financial status through the property paperwork.

 

Audited Financial Statements of Companies - Audited balance sheets and profit/loss account statements will be required to analyze the financial stability. Banks will assess the net worth of companies/partnership firms after considering all the liabilities to determine the financial positions of the organization/entities.

 

Certificate of Net Worth by a Chartered Accountant: Major banks will ask for a net worth report produced by a Chartered Accountant to furnish this certificate. A net worth credential shows all the assets and liabilities of an entity/organization.

 

Gold valuation certificate: The entities/individuals/organization who hold gold security in their possession and a bank may consider it while issuing a solvency certificate.

 

Other relevant documents - If you have any other appropriate documents (apart from the listed above) such as shares, mutual funds, provident fund statements etc can furnish them to the bank. 

 

Once the bank rectifies your documents and is satisfied with the submitted documents and the solvency of individuals/entities/organizations regarding the liability to be held, the bank will issue a solvency certificate to you.

However, the bank will not be responsible for any liabilities that may happen in the future based on solvency certification. 

 

A solvency certificate will only be issued to reliable individuals and the bank will levy an applicable charge for this. Although the bank manager is restricted to issuing only a limited number of solvency certificates. If s/he goes out of the prescribed limit of issuing the solvency certificate, then the higher official will be informed about it for further action.

 

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