The Reserve Bank of India (RBI) on Tuesday said that Chartered Accountants firm Haribhakti & Co has been barred from auditing regulated companies by RBI for a period of 2 years with effect from April 1, 2022.
The RBI said that this action has been taken on account of the failure on the part of the audit firm to comply with a specific direction issued 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.
Though, the action against Haribhakti & Co will not impact FY22 audits of companies. “This will not impact audit assignment/s of M/s Haribhakti & Co. LLP in RBI regulated entities for the financial year 2021-22,” the circular stated.
Haribhakti is the auditor of several financial institutions in India, according to exchange filings, including Axis Bank Ltd, IndusInd Bank Ltd. The CA firm 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 RBI had recently superseded the boards of these two companies owing to governance concerns and defaults by the companies in meeting payment obligations.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.
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