RBI Replies on the Signing of Non-Audited Financials by CAs

Sir/Madam,

An application under Right to Information Act, 2005 – Registration No. RBIND/R/E/21/02246

Please refer to your application received on 06.03.2021 seeking certain information under the Right to Information Act, 2005

2. The information is furnished in the Annex.

3. We would like to inform you that the First Appellate Authority in Reserve Bank of India is Shri P Vijaya Kumar, Executive Director, Reserve Bank of India, Department of Regulation, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai – 400001. Appeal, if any, in respect of the above reply, should be preferred within 30 days to the First Appellate Authority.

Query 1. Signing on Project Report for Loan Purposes with seal/UDIN of CA thereon. I wish to ask the Reserve Bank of India if there is a specific circular/notification issued by them to the commercial banks demanding signing on Project Reports/CMA Report by CAs while advancing New/ Old Loans.

Query 2. Giving certification/ Signing on Unaudited balance sheets and on Income Tax Returns of Clients (for those who don’t fall under the category of Audit Cases such as Income Tax, Company Act, etc) & generating UDIN thereon. I wish to ask the Reserve Bank of India if there is a specific circular/notification issued by them to all the commercials banks.

Reply:- We have not issued any specific instructions in this regard.

However, it may be noted that credit-related issues are mostly deregulated. The Reserve Bank of India has advised banks to have documents of investment policy, loan policy, loan recovery policy, etc. prepared and duly vetted by their Boards of Directors. Banks are required to make credit-related decisions based on Board-approved policies subject to the instructions contained in our Master Circular on “Loans and Advances – Statutory and Other Restrictions” issued vide DBR. No.Dir.BC.10/13.03.00/2015-16 dated July 1, 2015, which is available on our website under the head ‘Notifications’.

Query 3. I wish to ask any policy drafted by RBI with such Banks to get a Certificate of Know you customer by CA if a client is known to him and validity of the same.

Reply:- We have not issued any specific instructions in this regard.

Related Topic:
Long Form Audit Report (LFAR) – Review: RBI

Query 4. Utilization Certificate from CA. Few banks before sanctioning of loan demand a CA certificate about stating facts that the client will not utilize the loan for any unlawful/ illegal/terrorist activities. I wish to know how CA can give such a certificate for loan benefits enjoyed by the client and the validity of the same. I wish to ask the Reserve Bank of India if there is a specific circular/notification issued by them to all the commercials banks.

All above matters are dealt with by the concerned bankers with their own/ potential customers for their respective benefits. I wish to know how come a Professional Chartered Accountant comes into the picture to certify/ validate for the acts performed by independent parties.

In connection to this, I urge you to please look into this matter on an urgent basis and act to issue reply and on my queries which will impact the large community of professionals like us.

Reply:- What is being sought is not information in terms of Section 2 (f) of the RTI Act, 2005. However, you may refer to query 1 and 2 above.