Technology has saved public sector banks hundreds of crore this year. However, it has also cost the jobs of many auditors. The government has decided to do away with audits of bank branches doing very low business. CNBC-TV18's Gopika Gopakumar reports.
The finance ministry has cut down on the number of branch audits for public sector banks this year.
CNBC-TV18 learns that the branches with more than Rs 20 crore advances will now be audited every year as against small branches with minimum Rs 6 crore advances. This will mean branches will small advances or less than Rs 20 crore advances will now be audited only once in five years. This will reduce the cost for almost all public sector banks. State Bank of India (SBI), for instance, will see nearly 30 percent reduction in auditor fees because only fewer branches will now be audited by fewer auditors.
Last year, the government had increased the advance limit from Rs 3 crore to Rs 6 crore. Reserve Bank of India (RBI) too wanted to do away with small bank branch audits as it believes that with the implementation of the core banking system branch audits have become increasingly irrelevant.
The core banking system brings all branches on a common platform and allows a branch managers and auditors to access data from any branch. However, the Institute of Chartered Accountants of India (ICAI) lobby had opposed this move because it would cost the jobs of many auditors.
But it looks like the pleas of the ICAI lobby has fallen on deaf ears and the ministry has taken a tough stance against them.
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