Factory vetting process step — bank solvency certificate request
In brief: A bank solvency certificate request is a formal vetting step where Bengal Origin Co. requires the factory's bank to confirm in writing that the working capital facility is active and the banking relationship is current. I require a certificate dated within the last six months before any order placement, and refresh it every six months while orders are active.
6 months
Refresh cadence
Every factory refreshes the certificate every six months while orders are active.
0%
Disclosure of limits
The certificate confirms the facility is active; it does not disclose the amount.
120+
Factories vetted
Number of Bangladesh factories I have personally walked through this step with.
The bank reference letter and the bank solvency certificate are not the same document, and treating them as interchangeable is the first mistake I see European buyers make when they try to build a vetting protocol from scratch. The reference letter is a general statement of relationship. The solvency certificate is a formal, dated confirmation issued on a standard format by the factory's bank. I require the second one. The first one is not enough.
Why does the solvency certificate exist as a separate step?
In 2022, a factory partner of mine lost its bank financing in the middle of production. The bank reference letters I had on file were six months old and worded generally — "the company maintains a banking relationship in good standing." That language did not, and could not, tell me whether the working capital facility had been frozen, downgraded, or pulled. By the time I learned the facility was gone, the orders had already failed. I have written about that case at length in the 2022 supply chain failure that built Bengal Origin Co.
The solvency certificate exists because the reference letter does not commit the bank to a current, dated statement. The certificate does. It is issued on bank letterhead, dated, signed by an authorised officer, and confirms the working capital facility is active as of the issue date. Bangladeshi banks issue this on a standard format. There is nothing exotic about the request.
What does the solvency certificate actually confirm?
The certificate confirms three things and only three things: that the factory holds an active working capital facility with the issuing bank, that the banking relationship is current, and that the factory is not in default on existing credit lines as of the issue date. It does not disclose the facility amount, the factory's credit utilisation, or its back-to-back LC exposure. That limitation is by design — Bangladeshi banks will not disclose facility limits to third parties, and I do not ask them to.
The reason this matters: a factory operating at 95% credit utilisation on an active facility will produce a clean solvency certificate. That is why I do not treat the certificate as the entire financial vetting protocol. It is one step of a multi-step process. The full financial vetting approach I use layers the certificate against capacity utilisation, wage payment timing, and utility payment status.
Bank solvency certificate — scope
Working capital facility is active
Banking relationship is current
No default on existing credit lines
Issued on bank letterhead, dated
Signed by an authorised bank officer
Standard Bangladesh Bank format
The facility amount or credit limit
Current credit utilisation percentage
Back-to-back LC exposure
Other liabilities or guarantor positions
Wage payment timing
Utility payment status
What does the solvency certificate not tell me?
| Question | Solvency certificate | Required from a separate source |
|---|---|---|
| Is the facility active? | Yes | — |
| What is the facility amount? | No | Not disclosed by Bangladeshi banks |
| Is the factory near its credit limit? | No | Inferred from capacity utilisation |
| Are wages being paid on time? | No | Direct factory check, monthly |
| Are utility bills current? | No | Direct factory check, quarterly |
| Is back-to-back LC exposure rising? | No | Order-by-order tracking |
Source: Bengal Origin Co. vetting protocol applied across 120+ Bangladesh factories, 2022-2026.
The certificate is a yes/no on the facility. Everything else — the texture of the factory's financial health — comes from operational checks. Wages paid by the 7th of the month is healthy. Wage payment slipping to the 15th is a warning. Past the 20th is serious. None of that is in the solvency certificate. None of it can be.
How is the bank solvency certificate request structured at Bengal Origin Co.?
The request goes to the factory in writing, naming the factory's commercial bank and the specific document required: a bank solvency certificate, on bank letterhead, dated within the last sixty days, signed by an authorised bank officer. I do not accept photocopies of older certificates, scanned signatures from generic templates, or letters from non-commercial-banking divisions.
A healthy factory produces the document in three to five working days. A factory that asks for two weeks, then asks for another week, then offers an older certificate "as a placeholder" is a factory I do not place an order with. This is what I mean when I say the delay is the most informative answer. I have walked away from factories at this step. The financial cost of doing so is zero. The cost of not doing so, I have already paid.
While orders are active, I refresh the certificate every six months. This is non-negotiable. A factory that had an active facility in January can lose it by July. The Bangladesh back-to-back LC system is fragile in ways that are not visible from outside the country.
What This Means for European Brands
If you are sourcing through a buying house that has not asked your factory partners for a current bank solvency certificate, you are exposed to a category of risk that LkSG, CSDDD, and BSCI documentation do not address. Compliance audits do not catch financial collapse. Insurance does not cover it. The solvency certificate request is one of the cheapest, fastest, most informative steps in a vetting process — and the willingness of a factory to comply with it tells you something the audit cannot. Ask for it on every active relationship.
If you want to see what a bank solvency certificate looks like in practice, or check whether your current Bangladesh factory relationships have one on file, I am happy to walk through the request format and what to do with the response.
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