In the wake of the recent R300-crore fraud in Citibank, finance minister Pranab Mukherjee said accounting firms must follow stricter disclosure norms and take all possible steps to ensure that such incidents do not recur. “Accountants have a critical role in guarding against window dressing of balance sheets that encourage entities to take more risks until they are dangerously leveraged,” Mukherjee said on Tuesday at a function organised by the Institute of Chartered Accountants of India (ICAI).
He said stronger disclosure standards are key for financial institutions, not just complex and sophisticated financial products. “We need to reflect upon possible flaws in our system and address them to withstand adversity,” the minister said. “We need to make our financial sector more competitive by enhancing efficiency and transparency.”
Mukherjee said apparent risk taken “should not encourage everyone to take more risks and increase risks for the entire system or at the global level.” The minister also said that the key challenge for the country was to sustain high growth rate and cross the double-digit growth barrier.
"The challenge now is to sustain this high GDP growth over the extended period of time and find the means to cross the double digit growth barrier in the coming years," Mukherjee said. Several estimates have suggested that India’s growth rate could cross the 9% level in the current fiscal.
“The Indian economy has recovered robustly in 2010-11, recording one of the fastest growth rates in the world,” the finance minister said.