autonomy to the bank
Hidden Truth behind giving autonomy to the bank for Auditor’s Appointment
Its a Government way for controlling NPA.
Readers would recall the recent Prime Minister remarks in the parliament that NPA actually is at 82% and not 36% when they have taken the charge from UPA. The figure of NPA was suppressed in National Interest, he further clarified.
Now, it is very clear that the figure of NPA was suppressed by the previous government & the banks and the facts was available with them.
The question arises how it could have been suppressed.
It’s time to know the Government has its own particular way of working. There is a diplomatic way.
All are well aware that the appointment of auditor was done by RBI as a regular practice. Suddenly, the power of appointment of auditor by RBI was withdrawn and the autonomy was given to the bank to appoint the auditor. The reason given was ,RBI need not interfere with this procedures.
Apparently all the stakeholders have taken it in a positive Street and no one thought anything otherwise as far as this action of the Government was concerned.
Now, the present revelation have made it clear.
The power was given to the bank so that they can appoint the auditor of their choice & preferences. It could help them suppress the NPA account.
it was very well known fact that auditors were asked to be soft for NPA during audit. They were even pressurized and warned that no audit would be allotted in subsequent years to such auditors.
The banks where ultimately controlling the auditor. This was the diplomatic style adopted by the Government.
All may be well aware that ICAI has given due presentation to the Finance Ministry that the auditors appointment may be continued by RBI to maintain its independence. However, this one not done for the obvious reason.
This is high time the original procedure of appointment of the auditor by the RBI may be re-installed. It will ensure the independence of the auditor.
What an innovative way the Government has adopted to control the NPA !!