TL;DR
- Audited looks back and is verified. Provisional looks back but is not yet verified. Projected looks forward and is built on your own assumptions. Banks read them in that order of trust.
- The common bank format asks for the last 2 to 3 years audited, the current year provisional, and the next 2 to 3 years projected. This is industry convention, not an RBI rule. RBI has issued no instruction on year buckets; each bank's own board-approved loan policy decides.
- CARO 2020 clause 3(ii)(b) is the hard backstop: for working-capital limits above Rs.5 crore, the auditor must report whether the quarterly statements you filed with the bank agree with your audited books. If they do not, it goes on record.
- A CA can compile your provisional figures, but no CA can certify your projections as accurate. Under ICAI's SAE 3400 the management owns the assumptions, and RBI has never asked banks to get CMA reports CA-signed.
Here is the mistake that stalls more CMA files than any ratio ever will. A borrower walks into the bank in October, hands over three columns of numbers, and calls them all "my financials." Column one is the audited FY 2024-25. Column two is the half-finished FY 2025-26, labeled provisional. Column three is FY 2026-27, which is pure projection. The bank treats column one as evidence, column two as a work-in-progress, and column three as a promise. The borrower treated all three as equally solid. That mismatch is where files die.
This article maps which label belongs on which year, what each label legally means, and where borrowers get caught. The worked example uses one Rs.18 crore trading company, shown the same year through all three lenses.
What do provisional, projected and audited actually mean?
The three terms describe when the numbers come from, not how good they are. Every CMA the bank reads carries all three at once.
| Type | Covers | Based on | Who vouches for it |
|---|---|---|---|
| Audited | A financial year that has ended and been through statutory audit | Actual results, tested by the auditor under the Companies Act | The statutory auditor, through the audit report |
| Provisional | A year that has ended but is not yet finalised or audited | Actual results, from your own books | You do. Nobody independent has checked them. |
| Estimated | The current financial year, still running | Actuals so far plus your forecast of the rest | You do. It is part history, part guess. |
| Projected | Future years, not yet begun | Management assumptions: sales growth, margins, capex | Your management does. A CA is professionally barred from vouching for their accuracy. |
Practitioners sometimes use provisional and unaudited interchangeably: provisional just means the numbers exist but the audit has not happened yet. Estimated sits between provisional and projected, for the year you are living through. Keep the three time directions straight and half the confusion disappears.
Which year gets which label in your CMA?
The label depends on when you apply. Take a borrower applying in October 2026, with a March year-end:
- FY 2023-24 and FY 2024-25: audited. Both years are closed and the audit reports are signed (the audit for FY 2024-25 was due by September 30, 2026).
- FY 2025-26: provisional (with estimates). Six months are actuals, six months are your forecast. This column is the one borrowers most often mislabel.
- FY 2026-27 onwards: projected. Entirely forward-looking. For working capital this is usually two to three years; term loans run longer.
Apply in April instead, and the map shifts: FY 2024-25 drops back to provisional because the audit is not done yet. The same set of books changes labels with the calendar. The downloadable checker below does this mapping for you: enter your application month and it assigns every year its correct label.
Does RBI prescribe how many audited years banks must take?
No. This is the single most useful sentence in this article. The Reserve Bank of India has not issued any instruction on how many audited, provisional or projected years a CMA must carry. What banks actually ask for, the last two to three years audited plus the current year provisional plus projections, is industry convention written into each bank's own board-approved loan policy.
The RBI said this itself, in writing. In a 2021 RTI reply on whether CAs must sign project reports and CMA reports, the RBI's order (DOR0021/04.03.001/2020-21, dated April 3, 2021) states: "We have not issued any specific instructions in this regard. However, it may be noted that credit related issues are mostly deregulated." The same reply adds that banks "are required to take credit related decisions based on Board approved policies." That is the whole legal picture: the year buckets come from your bank's policy, not from any RBI circular. If your bank wants three audited years and the bank across the road wants two, both are acting within the rules.
Why this matters to you: you cannot argue "RBI says two years is enough" with a credit officer whose board policy says three. And your CA cannot quote any circular to shorten the list either. The negotiation is with the bank's policy, and policies vary.
Who has to get their books audited, and who does not?
This is where company borrowers and everyone else split. The Companies Act, 2013 (Section 139) says every company shall appoint an auditor at its annual general meeting. Every company: private limited, public limited, one-person company, Section 8, even dormant ones. Turnover does not matter. There is no small-company exemption from the audit itself. If your borrowing entity is a company, the bank's demand for audited financials is not a bank quirk. It is the law.
For proprietorships, partnerships and LLPs the picture is different. The tax audit under Section 44AB of the Income-tax Act applies when business turnover exceeds Rs.1 crore. If at least 95% of your receipts and payments are digital, the threshold rises to Rs.10 crore. For professionals the limits are Rs.50 lakh of gross receipts, or Rs.75 lakh where 95% of receipts come through non-cash channels. Miss the tax audit and Section 271B allows a penalty of 0.5% of turnover, capped at Rs.1.5 lakh. So a proprietorship doing Rs.8 crore with fully digital dealings needs no tax audit, while an identical company must still have a statutory audit. SME borrowers mix these two up constantly, and banks do not.
What happens when the audited numbers disagree with what you filed with the bank?
This is the question that makes the provisional-versus-audited distinction a legal discipline, not just a banking nicety. Every quarter, borrowers with working-capital limits file stock and book-debt statements with the bank. Those quarterly filings are provisional by nature. Later the audited books arrive. CARO 2020, clause 3(ii)(b), forces the statutory auditor to check the two against each other and report.
The clause applies where the company has been sanctioned working-capital limits "in excess of five crore rupees, in aggregate", from banks or financial institutions, against the security of current assets. Note the wording: strictly above Rs.5 crore, not "Rs.5 crore and above" as many summaries loosely put it. Where it applies, the auditor must state whether the quarterly returns or statements filed with the banks "are in agreement with the books of account of the Company, if not, give details." There is no tolerance band. It is binary: in agreement, or give details.
Two things borrowers get wrong here. First, the famous 10% tolerance belongs to the clause next door, 3(ii)(a), which covers physical verification of inventory. It does not apply to the bank-statement comparison in (ii)(b). Second, "give details" means the gap becomes public, printed in the auditor's report that every lender reads. A provisional figure that was quietly optimistic in January becomes a disclosed disagreement in September. The CARO check is exactly why banks treat provisional numbers as provisional, and why your quarterly filings to the bank should be prepared with the same care as the audit itself. Read our stock audit guide for what the bank's own verification looks like from the other side.
How do banks treat projections they do not believe?
No RBI circular tells banks to apply a haircut to your projections. What banks actually do is quieter and harder to fight. They cross-verify your CMA turnover against your filed ITR and GST returns for the same years. Practitioners who fix rejected files call this the most serious failure category: once the historical figures do not tie to the tax filings, the bank stops trusting the entire document.
At every annual renewal the bank does something else your projections cannot escape: it compares this year's actuals against last year's projections. A single miss gets a question. A pattern of consistently overshooting projections gets your new projections discounted, sometimes anchored to your historical growth rate instead of your forecast. As one bank-audit manual puts it, a standing lapse is projections that "stay far beyond the actual performance" with no explanation taken from the borrower. The renewal meeting is where last year's optimism is priced in. For term loans built purely on projections, banks probe the assumptions and stress them, the same discipline we walk through in our term loan appraisal guide and our DSCR guide.
The credibility ledger: every CMA you file writes a record. Beat your projections and the next appraisal trusts you more. Miss them two years running with no written explanation, and the bank mentally discounts your third set before reading them. Projections are a promise the bank remembers.
Can your CA certify your projections?
A CA can compile your provisional figures, with a UDIN, and that often helps. What a CA cannot do is certify your projections as accurate. The profession's own standard, ICAI's SAE 3400 on the examination of prospective financial information, is explicit: "the preparation and presentation of the projection including the underlying assumptions is the responsibility of the Management," and the standard's scope includes documents prepared "for the information of lenders" such as cash flow forecasts. The CA examines the evidence behind the assumptions. The CA does not, in the standard's own words, "vouch for the accuracy of the same."
The CA Act goes further. Its Second Schedule treats it as professional misconduct for a CA to let his name be used with an estimate of earnings contingent on future transactions "in a manner which may lead to belief that he vouches for ACCURACY of forecast." So a CA signature on your projections adds credibility to the process, never a guarantee of the numbers. And as the RBI's 2021 RTI reply confirms, the RBI has never asked banks to get CMA reports or project reports signed by CAs. If your bank insists on a CA-signed projection, that is the bank's own policy speaking, not the regulator. Ask the officer to show you the policy clause; sometimes it is negotiable, sometimes it is not, but at least you will know who you are negotiating with.
The same year, three ways: a worked example
Take Shree Balaji Traders, a private limited trading company with turnover around Rs.18 crore. The numbers below are illustrative, but the mechanics are exactly what happens in real files. Watch the same FY 2024-25 through each lens.
| Item (Rs. lakh) | Provisional (as filed) | Audited (after adjustments) | What changed |
|---|---|---|---|
| Turnover | 1,820 | 1,820 | Nothing. Sales were real. |
| Doubtful-debt provision | 0 | 20 | Auditor's ageing analysis forced a provision on old receivables. |
| Prior-period expenses | 0 | 6 | Expenses wrongly parked in prepaid were pushed back to the P and L. |
| Net profit | 72 | 46 | A 36% fall. Margin drops from 3.96% to 2.53%. |
Every ratio the bank computed on the provisional 72 lakh was flattering the borrower by more than a third. DSCR, interest coverage, the current ratio: all of them were computed on profit that did not survive the audit. And the damage does not stop at the P and L. The provisional balance sheet showed debtors of Rs.4.2 crore, or 84 days of sales. After the ageing-based write-down, realisable debtors were Rs.3.4 crore. Drawing power computed on the provisional number would have overstated eligible current assets, which is exactly what the bank's stock audit is designed to catch. The workbook below replays this adjustment so you can plug in your own numbers.
Now the projection side. Last year's CMA had projected FY 2025-26 turnover at Rs.24 crore. Actuals landed at Rs.17.6 crore, a 27% shortfall, with no written explanation offered at renewal. This year's projections will be read through that lens. And the cross-check: the CMA operating statement claimed Rs.18.2 crore of turnover while the filed GST returns showed Rs.16.8 crore, a 7.7% gap nobody had reconciled. That single gap is enough to freeze an appraisal. These are the three most common ways the three lenses collide, and they are all in our CMA rejections guide as well.
Which CMA statement carries the provisional and projected numbers?
The common bank format runs seven statements: (1) particulars of current and proposed limits, (2) the operating statement, (3) analysis of the balance sheet, (4) the comparative statement of current assets and current liabilities, (5) MPBF, (6) the fund flow statement, and (7) ratio analysis. The financials live in statements 2 and 3, and both of them run all three lenses side by side: past years audited, the current year provisional or estimated, the future years projected. That is the whole point of the format. One page lets the officer see the audited track record, the half-built present, and the promised future in a single row. Formats vary by bank, some use five forms, but the three-lens layout is the constant. Our CMA data guide and the CAM guide show how the officer reads them together.
Provisional vs Projected vs Audited Checker
All-formula workbook: a year-bucket mapper that labels every CMA year for your application month, the Rs 18.2 cr auditor-adjustment worked example with margin and DSCR impact, a CMA vs GST vs ITR cross-verification sheet, and a self-verification sheet. No sign-up needed
Filing a CMA this quarter? The numbers banks trust most are the ones that tie to your GST and ITR filings without a gap. CrediLens reads financial documents the way a credit officer does, so your statements come out clean before anyone checks them. See how it works
Sources
- RBI RTI reply, Order No. DOR0021/04.03.001/2020-21, April 3, 2021: "We have not issued any specific instructions" on CA signing of project reports or CMA reports; credit matters "mostly deregulated"; banks decide per board-approved policies.
- Companies Act, 2013, Sections 139 to 147 (ICAI compilation): "every company shall" appoint an auditor; no turnover exemption.
- ClearTax on Section 44AB tax audit: Rs.1 crore threshold; Rs.10 crore where 95% of transactions are digital; Rs.50 lakh / Rs.75 lakh for professions.
- CARO 2020 clause 3(ii)(b): quarterly statements to banks "in excess of five crore rupees" must "be in agreement with the books of account of the Company, if not, give details"; no tolerance band (wording verified across three independent CA sources).
- ClearTax CMA overview: the common seven-statement bank format and the "previous 2 years audited plus current-year provisional" convention.
- ICMAI journal, January 2026: CMA Report (Forms I to VII) reference.
Regulatory claims were checked against the primary sources above; the CARO 2020 wording was verified across three independent secondary sources (the MCA gazette text was not directly accessible). Year buckets, bank cross-verification practices, and audit-adjustment mechanics are described as industry convention, not RBI law; the binding source is the individual bank's board-approved policy.
Frequently Asked Questions
How many years of audited financials does a bank want in CMA data?
Most banks ask for the last two to three years audited, the current year provisional, and two to three years projected. This is industry convention written into each bank's board-approved loan policy. RBI has issued no instruction on year buckets, so the exact count varies from bank to bank.
What is a provisional balance sheet for a bank loan?
A balance sheet for a financial year that has ended but is not yet finalised or audited. It is built from your actual books, so it reflects real results, but no independent auditor has verified it. Banks read it as a work-in-progress and expect the audited version to replace it later.
Are projected financials legally binding on the borrower?
No. Projections are management's estimates, and under ICAI's SAE 3400 the management owns the assumptions. But they are not consequence-free: at every renewal the bank compares actuals against your earlier projections, and a pattern of misses discounts your credibility on the next set.
Can a bank reject my CMA if the turnover does not match my GST returns?
Yes, and this is one of the most common rejection triggers. Banks cross-verify CMA turnover against filed ITR and GST returns for the same years. An unexplained gap raises a credibility question over the entire document, so reconcile the three sources before submitting.
Does RBI require my CA to sign the CMA projections?
No. RBI confirmed in a 2021 RTI reply that it has not issued any instruction requiring banks to get CMA reports or project reports signed by CAs. If your bank demands a CA signature, that is the bank's own policy. A CA can compile provisional figures, but cannot certify projections as accurate.
What is CARO 2020 clause 3(ii)(b) and why should a borrower care?
It requires the statutory auditor to report whether the quarterly statements you filed with the bank agree with your audited books, for working-capital limits above Rs.5 crore. If they do not, the auditor must give details publicly. Optimistic provisional filings become disclosed disagreements.
Which CMA statement carries the provisional and projected numbers?
In the common seven-statement bank format, the operating statement and the analysis of the balance sheet run all three lenses side by side: past years audited, the current year provisional or estimated, and future years projected. Formats vary by bank, but the three-lens layout is the constant.
Last updated: October 2026. Worked-example figures are illustrative. Regulatory claims were checked against RBI's 2021 RTI reply, the Companies Act 2013, and ICAI's SAE 3400; year buckets and bank practices are stated as industry convention, not RBI law.
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