NEW DELHI: The Reserve Bank of India (RBI) on Tuesday said that it has debarred audit firm Haribhakti & Co, the auditor of SREI Infrastructure Finance (SIFL), from undertaking audit assignments for banking and non-banking financial companies (NBFC) for at least two years starting from April 1, 2022 for failing to comply with RBI guidelines.
“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,” a statement by RBI said. The RBI superseded the boards of SIFL and Srei Equipment Finance (SEFL) on October 4 over governance concerns and payment defaults.
The RBI action has been initiated under section 45MAA of the Reserve Bank of India Act, which says that punitive actions can be taken against the auditor in case of violation. The action will not affect Haribhakti’s auditing assignments for the current fiscal 2021-22. It is the first time that any auditor has been implicated under this act.
The National Company Law Tribunal ( NCLT) had on Friday admitted the insolvency pleas moved by the RBI against the two SREI group companies and appointed an administrator to run the two entities after the Bombay High Court dismissed SREI Group’s plea against RBI action on them. Meanwhile, Sunil Kanoria, Co-founder and Vice Chairman of SREI Infrastructure Finance, has stepped down as Central Council Member of the Institute of Chartered Accountants of India (ICAI).