Startup Salahkar

Puja Mohan & Associates
Company Secretaries
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Due Diligence

Due Diligence for Banks

The Due Diligence Report for Banks is a critical tool used to assess the financial and governance practices of a borrowing entity. Its primary purpose is to evaluate the company’s compliance with applicable laws and regulations, and to review the borrower’s conduct, particularly in relation to previous and current credit obligations. This helps banks ensure that entities seeking loans or credit facilities meet the required legal and financial standards.

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    The due diligence process enables banks to examine the borrowing company’s past borrowing history, repayment performance, and the default status of its directors or the company itself. By conducting thorough due diligence, banks can mitigate risk and ensure safer lending practices. It also provides confidence to bankers when adding new clients to their portfolio.

    As per the RBI Notification No. DBOD No. BP.BC.110/08.12.001/2008-29, issued on February 10, 2009, banks may require companies to obtain a Due Diligence Certificate from professionals, particularly Company Secretaries. This certificate confirms that the company has complied with all relevant provisions of the Companies Act, 2013 and other applicable laws.

    The report also ensures that the company has adhered to the necessary corporate governance standards and financial regulations, thus providing banks with greater assurance when extending credit or entering into business relationships.