Who Can Prepare a Project Report for a Bank Loan? You, a CA or Both

No law says who must prepare a project report for a bank loan. You can write it yourself, or hire a consultant or a chartered accountant. What banks often insist on is a CA's signature on certain parts, such as audited accounts or a certificate of project cost and your own contribution. Ask your branch which parts need one.

Does the law say who must prepare it?

No. A project report is your plan written in numbers: what you will buy, what it costs, who pays for which part, what you will sell and how you will repay. No statute or RBI rule names the person who must draft it. The bank reads it, tests it and decides. If the numbers hold up, it does not matter much whose name is on the cover.

So why do so many people tell you a CA must make it? Because parts of the loan file do need a CA's signature, and owners mix up the report with the certificates that go with it. Separate the two and the choice becomes simpler.

Your options, side by side

Some government schemes and banks publish their own formats or model project profiles. If yours does, the format matters more than the preparer. Use it.

What only a chartered accountant can sign

The report itself can be drafted by anyone. Some papers in the loan file cannot. A bank may ask for:

• Audited financial statements of past years. An audit report is signed by a practising CA.
• A certificate of cost incurred and means of finance, showing what has been spent on the project and where the money came from. Union Bank of India's checklist lists this for term loans.
• A certificate of promoter contribution, confirming that your share has actually come into the business. The same checklist asks for this.
• A net worth certificate of the promoter or guarantor, which many banks ask for in practice.

Every such certificate signed on or after 1 February 2019 must carry a UDIN. ICAI brought it in after complaints that non-CAs were forging CA signatures. A certificate without one should make you, and the bank, suspicious.

Does a CA's signature make the projections safe?

Not by itself. A CA can examine projections under ICAI's standard for prospective financial information (issued as AAS 35) and report on whether the assumptions give a reasonable basis. That is not a promise that you will hit the numbers. The credit officer still compares your sales with your GST returns, your costs with quotations, and your margins with others in your trade.

What a good preparer, CA or not, really adds is judgment: telling you that a 40% margin will not be believed, or that you forgot deposits and installation in the project cost. That is what you are paying for.

A worked example: the contribution certificate

Sunita plans a printing unit. Machinery and installation cost Rs 20,00,000. She asks for a term loan of Rs 15,00,000 and shows her own contribution as Rs 5,00,000, which is 25%. Her bank asks for a CA certificate on the promoter contribution.

She drafted the report herself, using quotations and a bank template. It reads well. But when the CA checks her business account, he finds only Rs 3,20,000. The other Rs 1,80,000 is in a fixed deposit in her husband's name and a sum her brother has promised.

• Contribution shown: Rs 5,00,000
• Contribution the CA can certify: Rs 3,20,000
• Gap: Rs 1,80,000

The CA cannot sign for money he cannot see. Sunita has three choices: bring the Rs 1,80,000 into the business account with a gift letter or a loan agreement, cut the project to what she can fund, or ask whether the bank will take the family deposit as additional security. Finding this before the bank does saves her a rejected file. The report fee was small next to that.

How to choose who prepares your report

1. Ask the branch for its format and the list of certificates it needs.
2. If any certificate needs a CA, decide whether the same CA should prepare the report. It saves a second round of checking.
3. Ask the preparer whether they have done reports in your trade.
4. Insist on a one-page note of assumptions and an editable file, so you can answer the banker's questions.
5. Check that every certificate carries a UDIN.
6. Read the report before you sign it. You, not the preparer, answer for every figure.

The mistake people usually make

The usual mistake is buying the cheapest ready-made report. These are often the same template with a new name: another unit's sales, someone else's staff costs, sometimes a different city in the text. Bankers have seen them. A report that does not match your quotations or your bank statement is worse than none.

The opposite mistake is paying for a CA's name and then handing over no papers. A certificate built on figures you said over the phone will not survive the bank's check. Give the preparer the same documents the banker will see. Our list of documents for a CMA or project report helps you gather them, and what a project report contains shows what the banker reads.

What does it cost to get help? Fees vary with the loan and the business. See project report and CMA charges for what drives the price.

Frequently asked questions

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