Bad loan menace: auditors come under lens of RBI

Focus on ‘colluding’ with promoters in loan defaults

With the RBI cracking the whip on bad loans menace, more than three dozen chartered accountants (CAs) are under the scanner for allegedly conniving with promoters in defaulting as well as restructuring the stressed assets, sources said.

At a time when more number of companies with stressed assets are coming under the Insolvency and Bankruptcy Code (IBC), the central bank is also looking at the role of various key personnel associated with such entities.

Sources said the Reserve Bank of India (RBI) is looking into the role of about 35 to 40 chartered accountants in loan defaults by companies.

The regulator is looking to ascertain whether these chartered accountants helped the entities in any illegal manner causing deliberate defaults and subsequently assisting them in restructuring the dud assets, they added.

The RBI lens on chartered accountants for suspected illegal activities with defaulting companies also come at a time when a substantial number of stressed assets are being taken up under the insolvency resolution mechanism. NPA woes in the banking system have been further highlighted with the over Rs. 13,000-crore scam at Punjab National Bank by diamond merchants Nirav Modi and Mehul Choksi.

SEBI scanner

Meanwhile, CAs, company secretaries, cost accountants and valuers may have to forfeit their fees and face penalties if they are found lacking in their dealings with listed firms, according to a new set of norms being considered by SEBI.

The Securities Exchange Board of India (SEBI) is looking to enhance oversight to check such frauds with new regulations for fiduciaries in the securities markets, a senior official said.

It will require additional disclosure requirements and greater scrutiny of financial statements by auditors and other third party entities, he said. SEBI may finalise rules which will put the responsibility on chartered accountants, company secretaries, cost accountants, valuers and monitoring agencies to get firms to comply with securities regulations and act in the interests of shareholders, he added.

If such entities are found lacking in their dealings, SEBI may disgorge the wrongful gains, including the fee earned, along with an interest of 12% per annum from the date of default. Besides, SEBI may ask them not to directly or indirectly issue any certificate or report.

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