RBI in its April 27th norms on auditors had said banks and NBFCs, excluding those that don’t take deposits and have a sub-Rs 1,000-crore asset base, must immediately bring in new auditors.
The para banks, however, were allowed to do the change from the second half of the fiscal year.
Banks and NBFCs, having an asset size of Rs 15,000 crore or more, were asked to appoint joint auditors. Crucially, there was retrospective applicability of the extended eligibility criteria for auditors, including those relating to the provision of audit and non-audit services.
Both the NBFC lobby group Finance Industry Development Council and the Confederation of Indian Industry protested the rules.
However, the RBI argued that the guidelines are compulsorily applicable to only 300 NBFCs, of the 9,600 operational in India. The other NBFCs, with asset sizes below Rs 1,000 crore, have the option to continue with their existing auditors.
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