industry

RBI bans SR Batliboi & Co for one year


Reserve Bank of India (RBI) has banned EY member firm SR Batliboi & Co from carrying out statutory audits assignments in commercial banks for one year starting from April 1, 2019. In a late evening release the RBI said that Batliboi has been banned due to “lapses identified in a statutory audit assignment carried out by the firm,” without giving any details.

The action by the central bank was based on the enforcement action framework put out by the RBI in June 2018 which listed audit lapses resulting in errors in a bank’s financial statement, wrong certifications and information given by auditors, misconduct of auditors and any other violations of RBI directions.

In a statement Batliboi said they have limited information of the RBI action. “We have learnt of this development from the press release issued by the RBI and are not aware of further details. Accordingly, we will be unable to comment further at this stage,” the audit firm said.

However, two people familiar with the RBI order said that the central bank’s action was linked to the audit of private sector Yes Bank’s financial statement for the fiscal year ended March 2016 which had thrown up a big divergence in the non performing assets (NPAs) of the bank.

“This action is pertaining to Yes bank for the fiscal ended March 2016. Batliboi is no longer the auditor for the bank after it was rotated out in line with norms but this is a follow up from those times,” said a person familiar. A Yes Bank spokesperson did not immediately reply to an email seeking comment.

An RBI assessment for the fiscal ended March 2016, pegged the total bank NPAs at Rs 4,925.68 crore as against the Rs 748.98-crore gross NPAs reported by Yes Bank, leading to a divergence of Rs 4,176.70 crore. This divergence further increased to Rs 6,335 crore in fiscal ended March 2017 and was considered the main reason the former CEO Rana Kapoor’s tenure was curtailed last year by the central bank.

“This action by the RBI is already in force and banks have been informed about it. There could be some other audit firms on the radar in the days to come,” said the second person.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.