This is the first time that the RBI has taken such action against an auditor of a systemically important NBFC.
The Reserve Bank of India (RBI) on Tuesday banned Haribhakti & Co LLP, one of the country’s top chartered accountant firms, from undertaking any audit assignments for regulated entities for a period of two years beginning April 1, 2022. have put. Action has been taken. In a statement, the central bank said in a statement, against the firm for failure to comply with a specific direction issued by the RBI with regard to statutory audit of a systemically important non-banking financial company (NBFC).
Haribhakti & Co LLP was the auditor of Srei Infrastructure Finance Ltd (SIFL), whose board was superseded by the RBI and insolvency proceedings were initiated last week. The tenure of the firm came to an end with the conclusion of the 35th Annual General Meeting (AGM) held on 19th September, 2020.
This is the first time that the RBI has taken such action against an auditor of a systemically important NBFC.
“The Reserve Bank of India (RBI), in exercise of the powers vested under section 45MAA of the Reserve Bank of India Act, 1934, has, by an order dated September 23, 2021, prohibited M/s Haribhakti & Co. LLP, Chartered Accountants. ( ICAI Firm Registration No. 103523W/W100048), from commencing any type of audit assignment in any entity regulated by RBI for a period of two years with effect from April 1, 2022,” it said.
The first debarment made under this provision of the RBI Act.
This will not affect the audit assignment of Haribhakti & Co LLP in RBI regulated entities for the financial year 2021-22.
In 2019, RBI imposed a one-year ban on global auditing firm EY-affiliated SR Batliboi & Co, after several lapses were found in a bank’s audit report.
The RBI last week superseded the boards of Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) for failure to repay loans.
The National Company Law Tribunal (NCLT) on Friday accepted insolvency petitions filed by banking sector regulator RBI against two of the Shrey Group firms and appointed an administrator to run the companies.
It is alleged that the practice of perpetuity was prevalent and existing accounts were being closed by sanctioning new loans, often to group entities of the borrower.
In some cases, loans were sanctioned for new loan accounts opened in changed names of existing NPA borrowers, which were used through circuits to close the earlier NPA accounts.
In November 2019, the Reserve Bank superseded DHFL’s board of directors due to governance concerns and defaults by DHFL in meeting various payment obligations. It was the first finance company to be referred to NCLT by RBI, exercising special powers under section 227 of IBC.
(with PTI input)
Read also: RBI retains 3-member advisory committee for Srei group companies
Read also: RBI slaps Rs 30 lakh fine on Pune-based Janata Sahakari Bank
.