In an unprecedented transfer, the Reserve Bank of India on Tuesday banned one of many nation’s high chartered accountant companies Haribhakti & Co LLP from enterprise any sort of audit assignments for regulated entities for a interval of two years beginning April 1, 2022.
Haribhakti and Co LLP was the auditor of Srei Infrastructure Finance Limited (SIFL), whose board was outmoded by the RBI, and insolvency proceedings have been initiated final week. The time period of the agency expired with the conclusion of the thirty fifth Annual General Meeting (AGM) held on September 19, 2020.
The banking sector regulator has taken this motion in opposition to the agency for failure to adjust to a particular path issued by the RBI with respect to its statutory audit of a Systemically Important Non-Banking Financial Company (NBFC), the central financial institution stated in a press release.
This is the primary time that the RBI has taken such motion in opposition to an auditor of any systemically necessary NBFC.
“The Reserve Bank of India (RBI) in the exercise of the powers vested under section 45MAA of the Reserve Bank of India Act, 1934, has, by an order dated September 23, 2021, debarred M/s Haribhakti & Co LLP, Chartered Accountants (ICAI Firm Registration No 103523W / W100048), from undertaking any type of audit assignment/s in any of the entities regulated by RBI for a period of two years with effect from April 1, 2022,” it stated.
The first debarment was accomplished below this provision of the RBI Act.
This won’t impression audit assignments of Haribhakti & Co LLP in RBI regulated entities for the monetary 12 months 2021-22, it added.
In 2019, the RBI had imposed a one-year ban on SR Batliboi & Co, an affiliate of worldwide auditing agency EY, after it discovered a number of lapses within the audit report of a financial institution.
RBI had final week outmoded the boards of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) for his or her failure to repay money owed.
The National Company Law Tribunal (NCLT) on Friday admitted the insolvency pleas moved by banking sector regulator RBI in opposition to the 2 Srei Group companies and appointed an administrator to run the businesses.
It is alleged that the observe of evergreening was rampant and present accounts have been being closed by the sanction of recent loans, typically to group entities of the borrower.
In some instances, loans have been sanctioned to new mortgage accounts opened in modified names of present NPA debtors, which have been then used by circuitous means to shut the sooner NPA accounts.
In November 2019, the Reserve Bank had outmoded the board of administrators of DHFL owing to governance issues and defaults by DHFL in assembly numerous cost obligations. It was the primary finance firm to be referred to NCLT by the RBI utilizing particular powers below Section 227 of the IBC.