Pvt Auditors To Scrutinise Small Nbfcs

The Reserve Bank of India (RBI) is proposing to entrust the task of auditing the smaller non-banking finance companies (NBFC) to private accredited auditors while it will monitor the accounting procedures of the larger NBFCs, top bank officials told the parliamentary standing committee on finance yesterday.

The RBI has also reassured the committee that with recent amendments to the RBI Act, it is in a better position to monitor the sector.

The battery of RBI officials, lead by bank governor C Rangarajan, deputy governors Y V R Reddy and Talwar, informed the committee that despite the lack of a single legislation for regulating the NBFC sector such as the Companies Act, the apex bank was now in a better position to monitor NBFCs.

 

The committee had been keen on examining the finance ministry officials on the adequacy of the auditing and monitoring systems and the accounting norms that were now in place following incidence of financial sector scams.

Sources in the committee said that though officials were not questioned directly on the CRB Capital Markets collapse, the committee wanted to convince itself that the recommendations of other committees such as the Shah Committee and the JPC had been heeded by the government while putting in place the new auditing and monitoring systems.

Towards this end, members of the Standing Committee questioned RBI officials if the semi-autonomous structure, comprising both private and government officials, which had been put in place was adequate to the task. RBI officials reportedly replied, We do hope so.

Committee members also wanted to know if there were any administrative, legal or constitutional problems which limited RBIs regulatory role. To this, The RBI said it was in a better position now.