IGI Logo

The Finance Industry Development Council (FIDC) has urged the Reserve Bank of India (RBI) to implement the new norms regarding appointment of statutory auditors by banks and NBFCs in the next financial year.

The guidelines for appointment of Statutory Central Auditors and Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including Housing Finance Companies) which were released on Tuesday would become applicable from the current financial year (2021-22).

In a letter to RBI Governor Shaktikanta Das, the FIDC said: "The circular should be made applicable from April 01, 2022 i.e. FY 23 onwards for a smooth transition. Most of the NBFCs have already finalised the auditors for FY 22 and the flexibility of changing auditors in the second half of FY 22 doesn't really help as (a) shareholder approval would be required and the notice of the AGM would have already been finalised."

It added that identifying a new auditor will take some time and it would be difficult for any new auditor to audit the accounts in a six-month period.

For a smooth implementation and minimum disruption therefore, the applicability of the circular can be with effect from April 1, 2022, which will then give the NBFCs sufficient time to plan, said the NDFC body.

As per the new guidelines, commercial banks will have to take prior approval of the RBI for appointment of both SCAs and SAs.

While NBFCs do not have to take prior approval of the RBI for appointment of statutory auditors, all NBFCs need to inform RBI about the appointment of the statutory auditors for each year by way of a certificate in 'Form A' within one month of such appointment.

The FIDC also told the RBI that the cooling period should be reduced to five years instead of six years to achieve better alignment with the Companies Act.