RBI Bans Haribhakti & Co from Auditing Entities for 2 Years

RBI Bans Haribhakti & Co from Auditing Entities for 2 Years

The Reserve Bank of India (RBI) has announced that Chartered Accountants major Haribhakti & Co has been banned from auditing regulated companies for a period of two years with effect from April 1, 2022.

The RBI states that this move has been taken on account of the failure on the part of the audit company to comply with a specific direction delivered by RBI with respect to its statutory audit of a Systemically Important Non-Banking Financial Company (NBFC). However, the central bank did not mention the name of the NBFC.

Nonetheless, the action against Haribhakti & Co would not affect FY22 audits of companies. The circular reads, “This will not impact audit assignment/s of M/s Haribhakti & Co. LLP in RBI regulated entities for the financial year 2021-22."

Haribhakti is the auditor of several financial institutions in India, according to exchange filings, that includes IndusInd Bank Ltd, Axis Bank Ltd, The CA foremost was the auditor for Srei Infrastructure Finance Ltd & Srei Equipment Leasing till September 2022. RBI had recently superseded the boards of these two companies owing to governance concerns and defaults by the companies in meeting payment obligations. 

India has been grappling with a shadow lending crisis since 2018 after a leading infrastructure financier went bankrupt, sending ripples across banks and other financiers leading eventually to rescues of at least half a dozen lenders.