Scrap the FRDI Bill, 2017

Written by IWP

The auditors, corporate companies and financial professionals accuse the central government of  diluting the bank audit system as well as power of Reserve Bank of India (RBI) for selection of auditors for auditing of banks. In fact, the management of banks are allowed to select the statutory auditors.

Earlier, the RBI used to appoint statutory auditors of banks. But to our utter surprise, the nation observes that from 2014-15, the power of the RBI to appoint central statutory auditors and branch statutory auditors was snatched by the central government and was handed over to the management of the respective banks. And the banks’ managements were allowed to select the statutory auditors taking only nominal permission of the RBI before the appointment.

The examinees themselves are appointing their own examiners which is contrary to the principles of public accounts auditing. They demanded the selection of bank central auditors and statutory branch auditors should be done under the control of the RBI and not in the hands of the bank management.

The creation of a national audit board which will act as a regulatory body for appointment of auditors of private listed companies, parallel to Ciamp;AG. They also apprehended there might be a nexus between the management of a particular bank and selected auditors’ of the lender if the selection process continues in this way.

The Ministry of Finance directed banks that the statutory branch audit has become routine and not much effective post implementation of CBS (core banking solution) in PSBs (public sector banks).  Statutory branch audit is essential and unfortunately, branches with advances of Rs 20 crore or below are not selected for statutory audit.

Keeping “Swift” out of the core banking solution was “one of the loopholes”.  There is an immediate need for the scrapping of the FRDI Bill, 2017.

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