Money & Banking

FIDC asks RBI to put off norms on auditor appointment by NBFCs to next fiscal

Our Bureau Mumbai | Updated on April 29, 2021

Finance Industry Development Council has requested the Reserve Bank of India to push back the guidelines for appointment of statutory auditors of banks and non-banking finance companies to April 1, 2022 or fiscal year 2022-23.

To give NBFCs time to comply with the new norms, and “For smooth implementation and minimum disruption, the applicability of the circular can be with effect from April 1, 2022,” FIDC said in a representation to the RBI Governor Shaktikanta Das.

FIDC is a representative body of assets and loan financing NBFCs.

“Most of the NBFCs have already finalised the auditors for 2021-22 and the flexibility of changing auditors in the second half of 2021-22 doesn’t really help as shareholder approval would be required and the notice of the AGM would have already been finalised,” FIDC said.

Further, 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, it said.

Cooling period

FIDC has also suggested that the cooling period should be reduced to five years instead of six as this will then better align with the Companies Act.

The RBI had on April 27 issued guidelines for appointment of statutory central auditors and statutory auditors for commercial banks, urban cooperative banks and NBFCs for the financial year 2021-22 and onwards.

UCBs and NBFCs will have the flexibility to adopt these guidelines from the second half of the year. While NBFCs do not have to take prior approval of the RBI for appointment of these auditors, all entities need to inform the RBI about the appointment for each year. Non-deposit taking NBFCs with asset size below ₹1,000 crore can continue with extant procedure.

Published on April 28, 2021

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