RBI bars Haribhakti & Co. LLP from undertaking audits in regulated entities

New Delhi, India, January 29 2020: Board of Reserve Bank of India outside of RBI building on Sansad Marg. Editorial credit: PradeepGaurs / Shutterstock.com

The Reserve Bank of India (RBI) on October 12 barred chartered accounting firm Haribhakti & Co from undertaking any type of audit assignments in any of the entities regulated by RBI for a period of two years with effect from April 1, 2022.

"The Reserve Bank of India (RBI) in exercise of the powers vested under section 45MAA of the Reserve Bank of India Act, 1934, has, by an order dated September 23, 2021, debarred M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W / W100048), from undertaking any type of audit assignment/s in any of the entities regulated by RBI for a period of two years with effect from April 1, 2022," the RBI said in a release.

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, the RBI said.

Although the RBI press release didn't name the NBFC, it is learned that the company in question is Srei Infrastructure Finance Ltd . Haribhakti & Co is the auditor of SIFL.

This order will not impact audit assignment/s of M/s Haribhakti & Co. LLP in RBI regulated entities for the financial year 2021-22, the RBI added. This is the first debarment done under this provision of RBI Act.

Section 45 MAA of the RBI Act permits the banking regulator to  take action against auditors if any auditor fails to comply with any direction given or order made by the Bank under the Act.

Under this, if the charges are proved the RBI can remove or debar the auditor from exercising the duties as auditor of any of the Bank regulated entities for a maximum period of three years, at a time.