Pressure is mounting on the Reserve Bank of India (RBI) from banks and non-banking financial companies (NBFCs) to relax the recent tightening of the guidelines on appointment of auditors. Industry bodies are up in arms against the RBI requirement on rotation, limiting and cooling off period for auditors of banks and NBFCs.
The RBI circular, issued on April 27, to tighten the auditing process is facing resistance from NBFCs which had a free run till now. While the central bank move is aimed at preventing frauds, hidden bad loans, cosy relationships between companies and auditors and cleaning up the auditing system after the fiasco involving IL&FS, Yes Bank and DHFL, NBFCs are now lobbying through industry bodies for a roll-back. Industry body Finance Industry Development Council (FIDC) has already written to the RBI, saying that the current form of the circular requires mid-year change in auditors for FY22, which is disruptive for most of the NBFCs and will cause avoidable hardships to both NBFCs and audit firms.