Notice to RBI on 'malpractices'
The HC issued the notice after a group of CAs alleged large-scale malpractices in the empanelment of auditors by RBI appointed for scrutinising the accounts.india Updated: Apr 02, 2006 10:30 IST
The Delhi High Court has issued notices to the Reserve Bank of India and two others on a petition filed by a group of Chartered Accountants.
The group alleged large-scale malpractices in the empanelment of auditors appointed for scrutinising the accounts of public sector banks in the country.
Besides seeking cancellation of the existing panel of statutory auditors constituted by the RBI, the petition filed by 23 Chartered Accountants sought an inquiry into the alleged malpractices in allotment of audit works to select individuals by the apex bank.
Justice Vikramjit Sen before whom the matter came up for hearing issued notices to the RBI, Union Finance Ministry and the Institute of Chartered Accountants of India to file their replies in two weeks and posted the matter for further hearing to April 24.
In the petition filed through counsel P Upadhaya, the Chartered Accounts Mukesh Singh Kushwah and others complained that the RBI despite the availability of sufficient number of auditors was alloting the audit works to a select few Chartered Accountants.
As per the convention, the RBI receives the list of eligible applicants from the Institute of Chartered Accounts of India to allocate their services for public sector banks.
However, it was alleged that the RBI with a motive to promote their own favourites allotted the audit works to a select few CAs who have been allocated more than one branch.
It was alleged that the RBI deliberately pruned down the list of the empanelled auditors so as to allot more than one branch to a select few Chartered Accountants.
The petitioners pointed out that many of the Chartered Accountants from Uttar Pradesh were allocated audit works for banks located in Hyderabad, Kolkata, Mumbai and other far-off places, though there were sufficient number of CAs available locally to do the job.
The petition alleged that this was done by creating an artificial shortage of Charatered Accounts with the banks and alloting more than one branch to the same auditor.
Citing alleged instances, the petition complained that in respect of banks like Central Bank of India, Indian Overseas Bank and Bank of India, some of the auditors have got more than four branches for conducting the audit.
The petitioners while seeking cancellation of the existing list of auditors sought a direction to the RBI to constitute a revised panel of auditors in terms of the eligible number of CAs in the country.