Solvency Certificate – Definition, Users

Solvency means the ability of an individual or entity to pay back its liabilities. A person is solvent when assets exceed liabilities. A solvency certificate is proof of finances that shows the financial position of an individual or entity. Government bodies or financial liquidators (for example banks) issue this certificate to know the financial strength of an individual or entity.

Additionally, it is required for various reasons. For instance, during applying for tenders, signing contracts, visa interviews, legal matters, etc.

Purpose of Solvency certificate

• Solvency determines the financial stability of a company. Hence, a firm has to submit a solvency certificate which acts as evidence of its financial status.
• Moreover, various government bodies require the certificate as a document of surety.
• It is an essential document while signing contracts and applying for tenders.
• A solvency certificate is also required for auctions.
• Additionally, universities abroad require a solvency certificate as proof of finances. Moreover, it is a requisite while seeking admission to engineering and medical colleges.
• It is required during court cases and legal matters. For example, during obtaining bails.

Documents required for obtaining a Solvency Certificate from a bank

Revenue Department and banks issue solvency certificates on request. Generally, banks issue the certificate based on the transactions of a customer.

• Application form- A pre-specified form to be filled by the customers for obtaining a solvency certificate.
• Identity and address proof- Current address proof of an individual or entity is necessary. For instance, Aadhar card, Electricity Bill, etc.
• Bank Statement- Banks issue solvency certificates for customers who transact with banks for a specific period. But, the time varies from bank to bank. The bank official analyzes the bank statements- saving and current account. They also evaluate the loan account, credit card transactions, etc. to know the financial background of an entity or individual.
• Audited financial statements (for companies and partnership firms)- Banks also have access to the net worth of a company. They determine their financial position after subtracting the liabilities. Therefore, audited balance sheets, profit & loss accounts, and cash flow statements are essential to issue the solvency certificate.
• Income tax returns- To understand the overall financial status of a company income tax returns for a certain number of years are also required.
• Property Documents- Properties like land and building act as collateral for the bank. Therefore, they are required to prove the financial status of an individual or entity.
• Gold Valuation certificates- Individuals possess gold, which is important security. Hence,  banks consider them while issuing the certificate.
• Certificate of Net worth by a Chartered Accountant- Banks also ask for a net worth statement from the chartered accountant of an individual or entity. A net worth statement has all the assets and liabilities of a company to date.
• Any other investment certificate- Other statements include investments in mutual funds, shares, provident funds, etc. Banks also evaluate these supporting documents with respect to the liabilities of an individual or entity.

Documents required for obtaining a Solvency Certificate by the government

The following documents are required for obtaining a Solvency Certificate from the government: –

• Proof of Identity (Aadhar Card, Voter ID, Passport etc.)
• Proof of residence (Example- Electricity bill)
• Copies of the application form
• Valuation report from the concerned state government
• Copy of society share certificate
• Society NOC form
• Notarized affidavit or self-declaration
• PAN Card
• Copies of the last three-year income tax returns
• A statement stating that the land is non-encumbered

Maharashtra Solvency Certificate

The solvency certificate issued by the Maharashtra government is valid for only one month. If one is applying offline then the court fee of ₹5 is applicable. The application form should be submitted to the concerned revenue department of the district.

The link for the offline form is:- https://cdn.s3waas.gov.in/s304025959b191f8f9de3f924f0940515f/uploads/2018/04/2018040637.pdf

Concerned Authority

The Revenue Department issues the solvency certificate. The applicant who wants to apply for a solvency certificate needs to go to the concerned authorities according to the value of the property for which the certificate is requested.

Online Application process

1. Firstly, visit the official website Government Right to Public Services Act.
2. Secondly, click on ‘Register Here’.
3. After that, it opens up to a new page where there are two options for registration.
4. Then, choose any one option. It will ask you to create a user id and password. Then, go back to the home page and enter the details over there.
5. Later, click on Revenue department on the present on the left and in the subcategories select revenue services.
6. Then, various options will appear on the screen. Scroll down and select Solvency certificate. Then click on Proceed.
7. Then, a list of options will open up. Further, select Solvency certificate.
8. After that, a list of required documents will open up. One can either take a printout or click continue.
9. After that, the registration form appears. One needs to fill up their information related to the applicant’s personal details, address as per documents, mobile number, username verification, etc.
10. Later, one also needs to upload their photograph which should fall between 5KB to 20KB. It should be in JPEG form with 160 pixels in width.
11. One also needs to attach proof of identity or proof of address along with the photo.
12. Later, on completion, click Register.
13. Further, upload the necessary documents asked in the next step.
14. Lastly, make the necessary payment and click on the Submit button.

Track Application status

Firstly, go to the homepage. Then, track the application status by clicking on the ‘Track your Application’ button.

After that, select Revenue Department, Revenue Services, and Solvency Certificate from the drop-down list. Also, one needs to mention their application number.

Verify Solvency Certificate

After the completion of all the application processes, the solvency certificate will be released digitally. Then, select Revenue Department, Revenue Services, and Solvency Certificate from the drop-down list.

After that, enter the 18-digit barcode number to verify the certificate authentication. Lastly, download the certificate and take a print out.