RBI Guidelines for nbfc

TAX AND REGULATORY CONSULTING SERVICES (TRCS)

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RBI recently released a circular on April 27 introducing new norms for appointment of Statutory Auditors for Non Banking Financial Corporations. The new norms bring large non-banks and housing finance companies, and urban cooperative under its purview when it comes to appointing statutory auditors and the new norms will be effective from this fiscal.

RBI circular April 27

APPLICABILITY

These guidelines will be applicable to the Commercial Banks (excluding RRBs), UCBs and NBFCs including HFCs (hereinafter referred to as the Entities) for Financial Year 2021-22 and onwards in respect of appointment/reappointment of SCAs/SAs1 of the Entities.

However, non-deposit taking NBFCs with asset size below Rs. 1,000 crore can continue with their extant procedure.

The guidelines provide necessary instructions for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs), number of auditors, their eligibility criteria, tenure and rotation etc, while ensuring the independence of auditors.

Banks and UCBs will be required to take prior RBI approval to appoint/reappoint SCAs/SAs on an annual basis. For entities with an asset size of Rs.15,000 crore, audit should be conducted under joint audit of a minimum of two audit firms. All other entities should appoint a minimum of one audit firm for conducting statutory audit.

APPOINTMENT OF AUDITORS ACCORDING TO SIZE

Appointment of auditors according to asset size

“It shall be ensured that joint auditors of the entity do not have any common partners and they are not under the same network of audit firms. Further, the entity may finalise the work allocation among SCAs/SAs, before the commencement of the statutory audit, in consultation with their SCAs/SAs”.

TENURE

In order to protect the independence of the auditors/audit firms, Entities will have to appoint the SCAs/SAs for a continuous period of 3 years, subject to the firms satisfying the eligibility norms each year. One audit firm can concurrently take up statutory audit of a maximum of four Commercial Banks [including not more than one PSB or one All India Financial Institution (NABARD, SIDBI, NHB, EXIM Bank) or RBI], eight UCBs and eight NBFCs during a particular year.

The apex local auditors body ICAI had publicly backed the policy saying that the new norms will help enhance audit quality, transparency and add value.

HOW SPC CAN HELP

SPC Group has been operationg in India since 1949 and is offering its services in Auditing, Assurance and Consulting

SPC Group, operating in India since 1949, is a technology-led multi-disciplinary group of reverent young minds, industry veterans and experienced professionals to provide high impact and cost-effective solutions to global businesses. Through our direct operations in India, North America and GCC, we serve a diverse range of clients, spanning multinationals, listed companies, privately owned companies, and family-owned businesses across the globe.

Our firm offers Accounting, Assurance and Consultancy as its core business lines for domestic and global businesses of medium to large size. The firm has engaged a panel of experts and offers end to end solutions for Company Law Matters, IFRS Convergence, Transfer Pricing, Risk and Transaction Advisory

Private Sector

  1. Statutory auditors of various listed companies in the private sector
  2. Experience of over 25 companies spanning 60+ years
  3. Industries served include manufacturing, hospitality, media, healthcare, textile, agriculture

Banking and Insurance Sector

  1. Empanelled with RBI since 1970 to conduct audit of all major public sector banks
  2. Appointed as the central statutory auditors of 4 national banks and 3 companies (life insurance and general insurance with a collective experience of 30+ years
  3. Conducted several independent branch audits of some of the largest national banks/ insurance companies over the years

Public Sector

  1. Statutory auditors of over 10 listed companies in the public sector
  2. Overall experience of over 15 companies spanning 40+ years
  3. Industries served include power, infrastructure, banking, petroleum, manufacturing, agriculture and telecom

 

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