RBI bans audit firm Haribhakti & Co for two years

Haribhakti & Co was the auditor of Srei Infrastructure Finance, whose committee was superseded by the RBI and against which insolvency proceedings were initiated past week.

The Reserve Bank of India (RBI) connected Tuesday banned chartered accountant steadfast Haribhakti & Co from undertaking immoderate benignant of audit assignments for regulated entities for a play of 2 years, starting April 1, 2022.

The enactment was taken for the firm’s nonaccomplishment to comply with a circumstantial absorption issued by the RBI with respect to its statutory audit of a systemically important non-banking fiscal institution (NBFC), the cardinal slope said successful a statement.

This is the archetypal clip the RBI has taken specified enactment against an auditor of a systemically important NBFC.

“The RBI has by an bid dated September 23, 2021, debarred Haribhakti & Co from undertaking immoderate benignant of audit assignment/s successful immoderate of the entities regulated by RBI for a play of 2 years with effect from April 1, 2022,” the connection said.

The enactment has been taken nether Section 45 MAA of the RBI Act, which allows the banking regulator to enactment against auditors. The prohibition volition not interaction audit the firm’s assignments successful RBI-regulated entities for the fiscal twelvemonth 2021-22, the connection said.

In 2019, the RBI had imposed a one-year prohibition connected SR Batliboi & Co, an affiliate of planetary auditing steadfast EY, aft it recovered lapses successful the audit study of a bank.

Haribhakti & Co was the auditor of Srei Infrastructure Finance, whose committee was superseded by the RBI and against which insolvency proceedings were initiated past week.

The Kolkata Bench of the National Company Law Tribunal connected October 8 gave its support to commencement insolvency proceedings against Srei Infrastructure Finance and its wholly owned subsidiary Srei Equipment Finance aft the RBI filed insolvency applications.

According to standing reports of March 6, 2021, by CARE Ratings, Srei Infrastructure Finance owed banks loans worthy Rs 11,117.71 crore, isolated from outstanding bonds and NCDs worthy Rs 710.63 crore.

Srei Equipment Finance had outstanding slope loans worthy Rs 16,912.21 crore and different indebtedness instruments worthy Rs 499.45 crore. All these facilities and instruments were rated ‘D’, oregon default grade, successful March.