Book Value refers to value of an asset as recorded in the borrower’s accounting books after depreciation or adjustments. It may differ significantly from market value or realizable value. For collateral, lenders generally rely more on valuation reports than book value alone. In MSME underwriting, it supports the bank’s secondary repayment comfort by identifying what security is available, who owns it, how it is valued and whether the charge can be enforced. For example, collateral may improve recovery comfort, but its value depends on ownership, legal enforceability, valuation quality and the bank’s charge priority. It matters because collateral can reduce loss severity, support sanction conditions and improve exposure comfort when business cash flows are volatile. The common mistake is to rely only on stated value; title defects, prior charges, documentation gaps and valuation haircuts can materially weaken security comfort.