Securities and Financial Assets explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Of the three asset classes, this is the one where the balance sheet is least useful and the most value hides.
It contains two very different kinds of thing: assets evidenced by documents — shares, bonds, loan confirmations, receivables — and assets evidenced by nothing at all, because nobody ever recorded them. Brands. Customer relationships. Franchise networks.
The first group needs verification. The second needs discovery.
Covers investments, trade receivables, loans to subsidiaries and group companies — and all intangibles. Book balances are a starting point, never the answer: receivables need collectability testing, inter-corporate loans need the borrower assessed, and intangibles need identifying before they can be valued.
What sits in this class
| Category | Examples |
|---|---|
| Investments | Equities, bonds, treasuries, mutual funds, holdings in subsidiaries and associates |
| Receivables | Trade debtors, retention money, claims and awards |
| Loans and advances | Inter-corporate deposits, loans to subsidiaries and group companies, advances to suppliers |
| Intangibles | Brands, trademarks, patents, designs, technology, franchise and licence rights, goodwill |
The last row is why this class matters more than its balance sheet size suggests. A brand-led business can show almost nothing here in the books and have its entire enterprise value sitting in the class. Intangible assets under IBC →
Receivables: the book balance is a claim, not a value
A receivable is documented, aged, and often acknowledged by the debtor. None of that makes it collectable.
What the valuer has to test:
- Age of the debt. Recovery probability falls steeply with age, and a ledger full of balances older than three years is telling you something.
- Creditworthiness of the counterparty. A confirmed receivable from a company itself in distress is worth a fraction of face.
- Legal enforceability. Is the claim time-barred? Is there a live dispute? Is there a contractual set-off the counterparty will assert?
- Set-off risk specifically. Counterparties who are also creditors of the corporate debtor will attempt to net. Mutual debts and set-off in IBC →
The output should be a probability-weighted realisable figure with the basis stated, not the ledger total less a round-number provision.
Inter-corporate loans: follow the money
In a large number of insolvencies, substantial sums have been advanced to subsidiaries and group companies. This is often the single largest line in the class, and the one treated most casually.
A loan to a subsidiary is only worth what the subsidiary can pay. Which means valuing it requires assessing the borrower — its assets, its own liabilities, whether it is itself insolvent, and whether the advance is documented well enough to be enforced at all.
Two things to watch:
Circularity. Where the subsidiary's principal asset is a receivable from the parent, the two balances cancel economically even though both sit gross in the books.
Avoidance exposure. Advances made in the run-up to commencement may be preferential or undervalued transactions, in which case the remedy is recovery, not valuation — and the two should not be double counted. Avoidance transactions under IBC →
Investments: quoted is easy, unquoted is not
Quoted securities value at market on the insolvency commencement date, adjusted for any lock-in, pledge or transfer restriction. Where a holding is pledged to a lender, that has to be reflected.
Unquoted holdings — typically subsidiaries and associates — require looking through to the underlying company. Net asset value, earnings, or a market approach where comparables exist. A group holding company's entire value may be its subsidiaries, in which case this is not a peripheral exercise, it is the valuation.
The intangibles half
Everything in this half starts with a problem the other half does not have: the asset is not in the books.
A brand built through decades of trading appears on the balance sheet only if it was purchased. So identification comes first, and it is done by reading contracts, not ledgers — trademark registrations, licence and franchise agreements, royalty receipts, distribution arrangements, technology transfer agreements.
Then the valuation methods, each with a fit:
- Relief-from-royalty — where royalty benchmarks or actual licence arrangements exist. In detail →
- Excess earnings — where the business operates and earnings can be attributed to the intangible.
- Cost approach — the fallback when no income or market evidence exists, and it should be labelled as a fallback.
And the recurring judgment: separating the temporary reputational damage the insolvency itself causes from the brand's intrinsic value. A thirty-year-old brand does not become worthless because a petition was admitted.
What this class contributes to liquidation value
Financial assets largely survive liquidation — a receivable is collectable whether or not the business continues, and a quoted security is saleable.
Intangibles are the harder call, and the test is transferability: can an acquirer buy this name, patent or franchise network on its own and use it? Where the answer is yes — common in consumer goods, education and retail — it belongs in liquidation value.
Leaving a transferable brand out of the liquidation value understates the Section 30(2)(b) floor for operational creditors. That is not a presentational point; it affects a statutory entitlement. Fair value vs liquidation value →
Key takeaways
- Two halves: documented financial assets, and undocumented intangibles.
- Test receivables for collectability, not just existence.
- A loan to a subsidiary is worth what the subsidiary can pay.
- Watch circular group balances and avoidance-transaction overlap.
- Unquoted holdings need a look-through to the underlying company.
- Identify intangibles from contracts, then value them.
- Transferability decides whether an intangible has liquidation value.
Read next
- Valuation of Intangible Assets Under IBC
- Trade Receivables and Inter-Company Loans in IBC Valuation
- Relief-from-Royalty Method for Brand Valuation
- Fair Value vs Liquidation Value Under IBC
Disclaimer: Positions stated as on 5 September 2026. General guidance only — valuation of financial assets and intangibles is highly fact-specific.