Why Your Valuation Report Was Rejected by the Bank or the ROC: The Six Most Common Reasons, by CA Murli Chandak, FCA

In short: A commercially reasonable valuation number rarely gets a report rejected. What gets it rejected is everything around the number: a valuer who was not eligible or independent for the assignment, a report that does not disclose what Rule 8(3) of the Companies (Registered Valuers and Valuation) Rules, 2017 requires, assumptions that cannot be traced back to a source, asset facts that do not match the title or fixed-asset records, a valuation date or purpose that does not fit the transaction, or figures that quietly diverge from the board resolution, the agreement and the PAS-3 filing. A bank and an ROC/MCA reviewer are not testing the same thing — one is pricing recoverability, the other is testing statutory and documentary consistency — which is exactly why a report built for one can still fail the other. This guide sets out the six reasons I see most often, a pre-submission checklist, a short case study, and what to actually do once a report has already been questioned.

Contents

1. Why Valuation Reports Get Rejected — And Why the Number Is Rarely the Problem
2. Bank Rejection vs ROC Filing Defect: Two Different Tests
3. Reason #1: The Valuer Was Not Eligible, Independent or Bank-Acceptable
4. Reason #2: Mandatory Report Contents Are Missing or Too Vague
5. Reason #3: The Methodology, Assumptions or Calculations Cannot Be Supported
6. Reason #4: Asset Facts, Title or Records Do Not Match
7. Reason #5: Wrong Purpose, Valuation Date or Basis of Value
8. Reason #6: The Report Does Not Match the Transaction Documents
9. Why Banks Often Ask for More Than the Statutory Minimum
10. The Pre-Submission Valuation Report Checklist
11. Case Study: How a ₹5-a-Share Gap Became a Four-Layer Problem
12. How to Fix a Rejected or Defective Valuation Report
13. Why Businesses Choose CA Murli Chandak for This Work
14. Related Reading
15. Final Takeaway
16. Frequently Asked Questions

1. Why Valuation Reports Get Rejected — And Why the Number Is Rarely the Problem

When a client brings me a valuation report that a bank has queried or an ROC filing that has come back with an objection, the first question I ask is almost never “is the value wrong?” In most cases the number is defensible. What has actually gone wrong sits around the number: who signed the report, what it discloses, whether the assumptions can be traced to a source, whether the asset described in the report matches the asset described everywhere else, and whether the transaction documents tell the same story as the valuation.

A valuation report is a professional opinion that connects a purpose, a valuation date, a subject, the information relied upon, a methodology and a conclusion into one coherent document. A lender reading that report is asking whether the value gives it comfort on its exposure. An ROC/MCA reviewer is asking whether the transaction and its documentation comply with the Companies Act framework. Those are different tests, and a report built with only one of them in mind can fail the other even where the underlying valuation work was competent.

The six reasons below are the ones I see most often across bank financing, preferential allotments, ESOP grants, and share transfers. None of them require redoing the valuation from scratch. Almost all of them are avoidable with a structured review before the report is submitted, which is the subject of Section 10.

2. Bank Rejection vs ROC Filing Defect: Two Different Tests

A bank questioning a valuation and an ROC/MCA filing being marked defective can involve the identical report, yet the underlying concern is rarely the same.

Aspect	Bank / Lender	ROC / MCA
Primary objective	Assess lending risk and recoverability	Establish statutory and transaction compliance
Main concern	Security value, collateral coverage and realisation	Legal requirements, disclosures and transaction consistency
Typical focus	Asset condition, marketability, LTV, recovery	Purpose, valuation date, valuer eligibility, transaction particulars
Professional requirement	May require a bank-empanelled or approved valuer	May require a Registered Valuer under Section 247 of the Companies Act, 2013
Internal standards	Lender-specific policy applies on top of the statutory minimum	Companies Act, rules and filing requirements apply

The practical consequence is that a startup fundraising valuation and a bank’s collateral valuation are not interchangeable, and a property valuation prepared for a mortgage does not automatically justify a preferential share issue price. Each is designed around a different question, for a different recipient, with a different acceptable basis of value. I set out where I see this specific mismatch go wrong for founders in Can an Indian Valuer Do a 409A Valuation?, which works through the same “prepared for one purpose, used for another” problem in a cross-border context.

3. Reason #1: The Valuer Was Not Eligible, Independent or Bank-Acceptable

This is the reason I flag most often, and it is entirely preventable at the appointment stage.

Where the Companies Act requires a valuation, Section 247 permits only a person registered with the Insolvency and Bankruptcy Board of India (IBBI) as a valuer, in the correct asset class, to sign it. The three notified asset classes are Land and Building, Plant and Machinery, and Securities or Financial Assets. A Chartered Accountant, a broker’s opinion, an architect’s estimate, or an old valuation report can each be useful evidence, but none of them substitutes for a Registered Valuer’s report where the Companies Act specifically requires one — and registration in one asset class does not extend to another.

Two further points cause otherwise sound reports to be questioned:

• Independence. A valuer with a financial interest in the outcome, a close relationship with management, or another engagement that creates a conflict undermines confidence in the conclusion even where the calculations are technically correct. The report should disclose this, not stay silent on it.
• Bank empanelment. A valuer can be entirely eligible under the Companies Act and still not satisfy a specific bank’s internal panel or approved-valuer requirement. Where the report is intended for a lender, confirm this before the engagement begins, not after the report is drafted — see Section 9.

A practical check I run before any engagement: confirm the valuer’s current IBBI registration and asset class against the IBBI register of registered valuers, confirm the applicable statutory provision actually requires a Registered Valuer for this specific transaction, and disclose any potential conflict in writing before work begins.

4. Reason #2: Mandatory Report Contents Are Missing or Too Vague

A report that states a value with a brief calculation and little else is vulnerable, because a reviewer cannot independently assess how the conclusion was reached. Where Rule 8(3) of the Companies (Registered Valuers and Valuation) Rules, 2017 applies, the report is expected to document the process, not just the outcome — the purpose and appointing authority, the valuer’s identity and eligibility, the appointment, valuation and report dates, the inspection undertaken, the sources of information relied upon, the procedures and valuation standard followed, the major factors that influenced the conclusion, and the caveats and limitations that genuinely apply (not caveats used to limit the valuer’s own responsibility for the work).

I have set out the full twelve-item Rule 8(3) breakdown, reviewer by reviewer, in Registered Valuer in Mumbai and Registered Valuer in Ahmedabad — worth reading in full if you want the item-by-item list rather than the summary here. The point worth repeating in this guide is simpler: a concise report that discloses all of this is far more defensible than a lengthy report that discloses little of it.

5. Reason #3: The Methodology, Assumptions or Calculations Cannot Be Supported

A valuation conclusion should be explainable, even if it is not expected to be exactly reproducible by another professional. The report becomes vulnerable when key inputs are undisclosed, material assumptions are unexplained, or the methodology described in the narrative does not match the calculations actually performed.

• Unsupported DCF projections. Adopting management’s revenue and margin projections without testing them against historical trends, capacity, and order visibility is the single most common weakness I see in a DCF-based report.
• Arbitrary discount and terminal-growth rates. Small changes in either can materially move the value. Both need an analytical rationale tied to the business’s risk profile and long-run economics, not a rate chosen because it produces a preferred number.
• Cherry-picked comparables. Selecting only the highest-multiple comparable companies or transactions, without explaining why they are genuinely similar, produces a biased conclusion that does not survive scrutiny.
• Unexplained discounts. A minority discount or a discount for lack of marketability applied as a round percentage, with no stated basis, invites a direct question.
• Methodology mismatch. The report says DCF; the workings show something closer to a net asset value. This kind of inconsistency undermines the whole report, not just the disputed section.

Sensitivity analysis on the two or three inputs that matter most — growth, margin, discount rate — does not remove the underlying uncertainty, but it shows a reviewer that the valuer has actually engaged with it rather than presented a single number as if it were certain.

6. Reason #4: Asset Facts, Title or Records Do Not Match

This reason is most visible in property and plant-and-machinery valuations, but it applies equally to a shareholding described inconsistently across different records. A survey number, address, built-up area or boundary that differs between the valuation report and the title deed; a construction stage described as complete in the report and as ongoing at inspection; ownership stated as belonging to the company when the title shows an individual — each of these raises the question of what was actually inspected and valued, independent of whether the valuation methodology itself was sound.

Before commissioning the valuation, I recommend building a short reconciliation pack: title documents, survey/plot particulars, sanctioned plans, insurance records, the fixed asset register, and any prior valuation report, brought together and checked against each other. This does not replace separate legal or title due diligence — a valuation report is not a title opinion — but it materially reduces the number of “which document is right?” questions a bank or ROC reviewer would otherwise have to raise.

7. Reason #5: Wrong Purpose, Valuation Date or Basis of Value

A valuation is prepared for a specific purpose, as of a specific date, using a specific basis of value. Reusing a report designed for one purpose to support a different transaction is one of the most common — and most avoidable — reasons a report gets questioned.

• Bank collateral is generally assessed for recoverability and realisation, not future growth potential.
• A preferential allotment or private placement needs to sit within the corporate and securities-law framework governing that specific issue.
• An ESOP valuation answers a different question from a fundraising valuation, even for the same company on nearly the same date.
• A merger, a tax-driven valuation, a shareholder dispute, and an insolvency valuation each carry their own basis, methodology and reporting expectations.

Dates matter as much as purpose. Distinguish clearly between the appointment date, the inspection date, the valuation date, the report date and the actual transaction date — and treat a valuation prepared for one purpose or transaction as generally unsuitable for a later, different transaction unless it is specifically revisited. An old report is not automatically wrong, but it should not be assumed current: a material change in revenue, capital structure, debt, or market conditions since the original valuation date is usually enough reason to commission a fresh one rather than stretch an old one to cover a new transaction.

One point I make to every client with business or professional income planning a share transaction: this is also where the fair market value floor under Rule 57 of the Income-tax Rules, 2026 (the Income-tax Act, 2025 successor to the old Rule 11UA mechanism under the Income-tax Act, 1961) sits alongside, and separately from, the Companies Act valuation — the two should be reconciled, not treated as the same number by coincidence.

8. Reason #6: The Report Does Not Match the Transaction Documents

A valuation report is one document in a larger set that usually includes the board resolution, any special resolution and explanatory statement, the transaction agreement, the cap table, and — for a share issue — Form PAS-3. Every one of these should describe the same company, the same securities, the same number and class of shares, the same issue price and premium, and the same valuation date.

The most common inconsistencies I see are basic and entirely avoidable: a different CIN or company name across documents, a pre- or post-transaction shareholding in the cap table that does not reconcile with the agreement, a securities premium in the statutory filing that does not match the issue price the valuation supports, or a valuation date that quietly differs from the date used in the resolution. None of these individually implies the valuation is wrong — but each one gives a reviewer a reason to ask, and every question adds time before the transaction closes.

Where the recipient is a bank rather than the ROC, the same principle applies to lender-specific requirements: collateral coverage, loan-to-value, the prescribed valuation format, and any inspection or documentation the lender’s internal policy requires on top of the statutory minimum. Section 9 covers this in more detail.

9. Why Banks Often Ask for More Than the Statutory Minimum

A report that fully satisfies the Companies Act does not automatically satisfy a particular lender. Banks maintain their own internal credit and valuation policies, which can extend to an empanelled or bank-approved valuer, a prescribed report format, mandatory physical inspection with photographs, a maximum permissible age for the report, and a specific basis of value (market value, realisable value, or a distress-sale scenario) for its collateral assessment.

An asset valued at ₹10 crore does not mean a bank will lend ₹10 crore against it — the lender separately applies its own loan-to-value or margin policy to arrive at the exposure it is willing to take. The valuer determines value within the scope of the assignment; the lender decides how much credit risk it will carry against that value, and that is a separate decision the valuation itself does not make.

The efficient sequence is to confirm the lender’s requirements — empanelment, format, inspection, and basis of value — before the valuer begins work, rather than commissioning the report first and discovering the requirement only when the bank raises a query.

10. The Pre-Submission Valuation Report Checklist

Before a report reaches a bank, an ROC filing, an auditor or an investor, I run it through a short structured check. The version below is a practical starting point for reviewing your own report before it is submitted.

1. Purpose. Does the stated purpose match the actual transaction, not a purpose copied from an earlier report?
2. Valuer eligibility. Is the valuer registered for the correct IBBI asset class, or otherwise eligible for this specific requirement?
3. Bank panel status. If the recipient is a lender, does the valuer meet its empanelment or approval requirement?
4. Independence. Is a conflict-of-interest disclosure present, or confirmed as not applicable?
5. Dates. Do the appointment, inspection, valuation, report and transaction dates reconcile with each other and with the requirement?
6. Asset or ownership details. Do the property, plant or shareholding particulars match the title, fixed-asset register or cap table?
7. Methodology and assumptions. Are the method, discount rate, terminal growth and comparable set explained rather than merely stated?
8. Supporting workings. Are the projections, comparable analysis and calculation sheets actually attached, not just referenced?
9. Inspection evidence. Are photographs and inspection notes available where a physical asset is involved?
10. Board and shareholder documents. Does the resolution, explanatory statement and agreement match the number of securities, price, and valuation date in the report?
11. PAS-3 and other filings. Do the statutory filing particulars reconcile with the transaction and the valuation?
12. Attachments. Is every annexure the report refers to actually included in the final file?
13. Legibility. Is the final PDF complete, correctly paginated, and are the signature and any DSC valid and properly embedded?

The final question I ask before any report leaves my desk: if a reviewer compares this report against every other document in the transaction, will the facts, dates, figures and purpose tell exactly the same story?

11. Case Study: How a ₹5-a-Share Gap Became a Four-Layer Problem

An illustration I use with clients: an unlisted company proposes to issue shares at ₹180 per share. The valuation report, using a DCF approach, concludes ₹175 per share. On its own, a ₹5 gap looks trivial. It stops being trivial once four separate weaknesses compound each other:

1. The DCF conclusion is not supported. The underlying projections are not attached, so a reviewer cannot see the revenue, margin or terminal assumptions behind ₹175.
2. The discount rate is unexplained. Because DCF value is sensitive to this input, an unexplained rate looks arbitrary rather than reasoned.
3. Independence documentation is incomplete. No conflict-of-interest disclosure appears in the report, which raises a separate question about the professional basis of the work.
4. The transaction documents do not agree. The explanatory statement refers to ₹180 per share; PAS-3 shows a premium that does not reconcile with either figure.

The instinctive fix — changing ₹175 to ₹180 in the report so every document matches — is the wrong move. A valuation conclusion should follow from the underlying analysis, not from the number the other documents happen to show. The correct sequence is to establish why the numbers differ (was ₹180 the intended transaction price and ₹175 the valuation conclusion, or was the valuation prepared on the wrong date or for the wrong purpose), reassess the DCF workings and discount rate, complete the independence disclosure, and only then reconcile the resolution, the agreement, the cap table and PAS-3 against the corrected valuation position — never the other way round.

12. How to Fix a Rejected or Defective Valuation Report

A query or rejection is not, by itself, evidence that the valuation is wrong. The first step is identifying precisely why the report was questioned, because different problems need different fixes.

Issue	Likely course of action
Typographical or administrative error	A straightforward correction
Missing disclosure (purpose, dates, independence)	Clarification or addendum, where the underlying work is sound
Missing supporting workings	Reconstruct and attach the workings actually used
Outdated financial information or valuation date	An updated valuation, reflecting the current position
Wrong professional or wrong asset class	A fresh valuation from an eligible valuer, in most cases
Methodology cannot be supported	Rework the analysis, or commission a fresh valuation
Material mismatch with transaction documents	Reconcile the documentation and reassess the report
Bank-specific format or panel issue	Address the lender’s specific requirement directly

Two principles I hold to on every correction. First, never edit the final valuation figure simply to make it match another document — establish why the numbers differ and fix the actual cause, as the case study above shows. Second, coordinate the correction across every team involved — finance for the underlying numbers, company secretarial for resolutions and filings, legal counsel for the agreements, and the lender’s own relationship team where a bank is involved — because a valuation fix that is not reflected in the surrounding documents simply relocates the inconsistency rather than resolving it.

13. Why Businesses Choose CA Murli Chandak for This Work

A pre-submission review of this kind needs more than a fresh look at the arithmetic. It needs an accurate read of the valuer-eligibility question, the Rule 8(3) disclosures, the methodology actually applied, and how the valuation sits against the surrounding corporate documents — and, where a tax or FEMA valuation sits alongside the Companies Act valuation, the ability to work through all of it under one roof.

My work covers:

• Registered valuation as an IBBI-Registered Valuer (Securities or Financial Assets, registration IBBI/RV/07/2021/14408) — for preferential allotments, ESOP grants, mergers, and share transfers.
• Pre-submission and rejected-report review — a focused check against the six reasons in this guide before, or after, a bank or ROC query is raised.
• Taxation services — reconciling the Rule 57 fair market value floor with the Companies Act valuation on the same transaction.
• Secretarial and ROC compliance — resolutions, explanatory statements and PAS-3 particulars kept consistent with the valuation.
• CFO services — for companies that want the projections behind a DCF valuation reviewed on an ongoing basis, not only at transaction time.

More detail on background and areas of practice is available on the About page.

14. Related Reading

• Registered Valuer in Mumbai — the full Rule 8(3) breakdown and reviewer-by-reviewer scrutiny
• Registered Valuer in Ahmedabad
• Registered Valuer in Bangalore
• Can an Indian Valuer Do a 409A Valuation?
• Startup Valuation Consultant in Mumbai
• Startup Valuation Consultant in Delhi
• Company Valuation Services

15. Final Takeaway

A valuation report survives scrutiny not because the number is high or low, but because the valuer was eligible and independent, the report discloses what Rule 8(3) requires, the methodology is traceable, the asset facts match the records, the purpose and date fit the transaction, and every surrounding document tells the same story. Run that check before submission, not after a query arrives — it is a fraction of the time and cost of resubmitting.

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16. Frequently Asked Questions

What is the single most common reason a valuation report is rejected?

In my experience it is a mismatch between the report and the surrounding transaction documents — a different valuation date, share count, issue price or premium appearing in the resolution, the agreement or the PAS-3 filing than in the valuation report itself.

Does a bank always require a Registered Valuer under the Companies Act?

Not necessarily. A bank can rely on its own internal empanelment and format requirements, which may or may not coincide with the Companies Act’s Section 247 requirement. Where a Companies Act transaction (such as a preferential allotment) is also involved, a Registered Valuer’s report is separately required for that purpose regardless of the bank’s own requirement.

Can one valuation report be used for a bank, the ROC and income tax?

Rarely without adaptation. Each of these has its own prescribed professional, methodology and, in some cases, a specific formula (such as the Rule 57 net asset value method for the tax floor value of unquoted equity shares). The underlying financial workings can be kept consistent across all three, but the certificates and reports themselves are generally separate documents.

What does Rule 8(3) actually require in a valuation report?

Background information on the asset, the purpose and appointing authority, the valuer’s identity and any conflict of interest, the appointment, valuation and report dates, the sources of information and procedures followed, the valuation methodology and major factors considered, the conclusion, and caveats that explain genuine limitations rather than disclaim the valuer’s own responsibility. The full item-by-item list is set out in Registered Valuer in Mumbai.

Can I reuse an old valuation report for a new transaction?

Only if nothing material has changed since its valuation date and the purpose genuinely matches. A material change in revenue, capital structure, debt position or market conditions, or a different purpose from the one the report was originally prepared for, is usually reason enough to commission a fresh valuation rather than stretch an old one.

My bank has rejected a report that seems technically correct. What should I do?

Ask specifically why. In many cases the underlying valuation is sound and the issue is a bank-specific requirement — empanelment, format, inspection evidence, or a particular basis of value — rather than an error in the valuation itself. Section 9 sets out what to check before resubmitting.

Should I just change the valuation figure to match the transaction price?

No. A valuation conclusion should follow from the underlying analysis, not from the figure another document happens to show. Changing the number without reassessing the methodology, purpose and date creates a report that no longer accurately represents the work performed — see the case study in Section 11.

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Speak to CA Murli Chandak

If a bank, an auditor or an ROC filing has questioned a valuation report, tell me what was raised and I can tell you whether it needs a correction, a clarification, or a fresh valuation.

CA Murli Chandak – FCA | IBBI-Registered Valuer (Securities or Financial Assets) | IBBI/RV/07/2021/14408
Website: murlichandak.com
Phone: +91 99985 39902
Email: murlichandak@murlichandak.com
LinkedIn: Connect with CA Murli Chandak

This article is intended for general guidance only and does not constitute professional valuation, legal or tax advice. Statutory positions are stated as at August 2026, including the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 with effect from 1 April 2026. Bank-specific requirements vary by lender and change from time to time. Please obtain advice specific to your transaction, and have your own report reviewed, before relying on it for submission.