In the current financial climate, Finance is the oxygen that keeps businesses running, but for a Chartered Accountant (CA), it is also a source of significant regulatory pressure. As we move through 2026, the intersection of RBI’s digital banking mandates and the Companies Act, 2013 has created a complex landscape for corporate funding. Managing a client’s debt portfolio now requires more than just a healthy balance sheet; it demands a proactive approach to compliance, risk assessment, and precise documentation.
Whether you are assisting a client with private limited company registration or helping an established firm secure a business loan, the stakes are high. One wrong move in charge creation or a missed resolution can lead to loan recalls, frozen assets, and personal liability for directors. This guide explores the practical examples and legal hurdles CAs face in the world of corporate Finance.
1. Legal Provisions for Borrowing (Section 180)
Legal Provision
Under Section 180(1)(c) of the Companies Act, 2013, the Board of Directors cannot borrow money that exceeds the company’s paid-up share capital, free reserves, and securities premium without obtaining a Special Resolution from the shareholders.
Applicability
This provision is a cornerstone of corporate compliance. While private companies were previously granted certain exemptions, banks in 2026 strictly demand proof of these resolutions to ensure the borrowing is “intra-vires” (within the powers of the company).
Practical Example
Imagine a retail company with a net worth of ₹5 crore. The directors want to take an aggressive working capital loan of ₹8 crore to fund a new warehouse. Since the loan amount exceeds the net worth, the CA must organize an Extra-Ordinary General Meeting (EGM), pass a Special Resolution, and file Form MGT-14 with the ROC. If the CA misses this, the bank may declare the loan “voidable,” creating a massive funding risk.
Common Error
CAs often fail to calculate the “aggregate debt” correctly. Many forget to include existing unsecured loans from directors or group entities in the total borrowing limit. If the total debt crosses the net worth threshold even by a small margin, the lack of a Special Resolution becomes a legal defect.
Practical CA Tip
Always maintain a “Borrowing Power Tracker.” Before every new loan application, verify the current Director Identification Number (DIN) status and the latest audited net worth. If the company has Startup India registration, check for specific debt-funding schemes that might have more flexible borrowing norms.
2. Charge Creation and ROC Filing (Form CHG-1)
Legal Provision
Section 77 of the Act mandates that every company must register a “charge” created on its property or assets within 30 days. This registration provides public notice that the asset is pledged as security for a loan.
Applicability
This is a non-negotiable step for any secured Finance. Whether it is a mortgage on a factory or a floating charge on stocks for a working capital loan, the ROC must be informed.
Practical Example
A tech firm secures a ₹2 crore overdraft against its receivables. The CA must file Form CHG-1 within the 30-day window. In 2026, with the MCA V3 portal’s real-time tracking, any delay beyond this window triggers automatic high penalties and requires a special “Condonation of Delay” process, which is both time-consuming and expensive.
Common Error
Waiting for the “Final Sanction Letter” or the “Disbursement” to file the charge. The clock starts ticking the moment the “Security Documents” are signed. Another common error is failing to register charges for vehicles or machines bought under hire-purchase agreements.
Practical CA Tip
Coordinate with the bank’s legal department early. Ensure the digital signature certificate of the bank’s representative is active on the MCA portal. Use the ROC filing due dates calendar to ensure you never miss the 30-day deadline.
Client Impact
An unregistered charge makes the lender an “unsecured creditor” in the eyes of the law. If the company faces partnership firm registration disputes or insolvency, the bank will have no priority over the assets, leading to immediate legal action against the directors.
3. Banking Compliance & CMA Data Accuracy
Legal Framework
Banks operate under RBI guidelines that require rigorous “Credit Monitoring Arrangement” (CMA) data. This data is the primary tool for assessing the “Maximum Permissible Bank Finance” (MPBF).
Applicability
Mandatory for any business seeking a business loan or cash credit facility above ₹5 crore. It is particularly critical for MSME registration holders seeking priority sector lending.
Practical Example
A client in the textile business is expanding and needs a higher credit limit. The CA must prepare a CMA report projecting future sales. If the CA projects a 50% growth but the income tax filing history shows only 5%, the bank will flag the data as “unrealistic,” leading to a rejection or a reduction in the sanctioned limit.
Common Error
Mismatched figures between the Provisional Balance Sheet and the GST registration portal. Banks now use automated tools to cross-verify turnover. If the CMA data doesn’t match the GST returns, it suggests financial manipulation.
Practical CA Tip
Perform a thorough GST and ROC reconciliation before finalizing the CMA report. If the client has an Import Export Code (IEC), ensure the “Export Incentives” are correctly reflected in the income projections to boost the credit score.
4. End-Use Monitoring and Section 185 Risks
Legal Provision
Section 185 of the Companies Act, 2013, prohibits companies from providing loans, guarantees, or security to directors or people in whom directors are interested. Section 186 regulates inter-corporate loans and investments.
Applicability
This is a high-risk area for group companies and family-run businesses where funds are often moved between entities to manage liquidity.
Practical Example
Company A takes a working capital loan for “Business Operations” but uses that money to give an interest-free loan to Company B (a sister concern owned by the director’s spouse). This is a direct violation of Section 185 and the bank’s “End-Use of Funds” clause. In 2026, such “diversion of funds” is the leading cause for companies being marked as “Wilful Defaulters.”
Common Error
Treating “Book Entries” as actual compliance. CAs often think that charging interest on inter-corporate loans makes them legal, but if the primary borrower doesn’t meet the “Principal Business” test, the loan remains a violation.
Practical CA Tip
Always issue a clear audit and assurance report if you find funds being used for non-business purposes. For better structural integrity, suggest the client move to a one person company registration or a clean subsidiary model where funds are tracked via formal “Equity Injection” rather than loans.
2026 Finance & Loan Compliance Checklist
To stay on top of the Finance needs of your clients, use this professional checklist:
| Task | Section/Rule | Key Document Required |
| Check Borrowing Power | Section 180 | EGM Special Resolution (MGT-14) |
| Register Charge | Section 77 | Form CHG-1 & Sanction Letter |
| Satisfy Charge | Section 82 | Form CHG-4 & No-Dues Certificate |
| MSME Priority Check | RBI Guidelines | Udyam Registration Certificate |
| Inter-Corporate Loan | Section 185/186 | Form MBP-1 & Interest Rate Proof |
| Director KYC | Rule 12A | DIN KYC Status |
| GST Reconciliation | Statutory Audit | GSTR-3B vs. Books of Accounts |
5. Impact of Digital Banking and Real-Time Reporting
In 2026, banks have integrated their systems with the MCA and GST portals. This means “Information Asymmetry” is a thing of the past. If a client fails to file their professional tax registration dues or ESI PF registration returns, the bank’s automated risk systems will flag the account within 48 hours.
Practical Example of Risk
A client misses an interest payment by one day. Simultaneously, their trademark registration expires. The bank’s algorithm might automatically lower the company’s internal credit rating, leading to a higher interest rate on the next renewal of the business loan.
Practical CA Tip
Encourage clients to use financial planning for businesses tools that automate statutory payments. A single missed income tax filing can disrupt the entire funding pipeline.
Steps for CAs to Secure Funding in 2026
If you are a CA helping a client raise capital, follow these steps to ensure success:
-
Clean the Master Data: Ensure there are no “Active Non-Compliant” tags on the MCA portal.
-
Verify Collateral: Ensure the property has a clear title. If it’s a rented premise, ensure the Shop and Establishment license is in the company’s name.
-
Project Report: Build a detailed report that accounts for modern risks, including ESG (Environmental, Social, and Governance) compliance.
-
CMA Consistency: Ensure the CMA figures match the audit and assurance reports exactly.
-
Funding Mix: Advise the client on a mix of debt and equity. For example, a nidhi company registration might be better for small-scale local lending than a traditional bank loan.
-
Foreign Funding: If looking at overseas debt, ensure strict FCRA registration and FEMA compliance to avoid massive penalties.
Additional Internal Links for Reference:
Conclusion
Mastering Finance, loans, and banking as a CA in 2026 requires a blend of legal knowledge and financial precision. By staying ahead of Section 180 limits, ensuring timely CHG-1 filings, and maintaining accurate CMA data, you can help your clients navigate the funding landscape with confidence. The key is to treat compliance not as a burden, but as a strategic tool that unlocks better interest rates and faster loan approvals.
