'Bank appointed CAs resulting in mounting NPAs'

RBI allowed own CAs for banks

 The Reserve Bank of India’s (RBIs) decision to allow banks to appoint their own Chartered Accountants has resulted in an increase in the number of Non-Performing Assets (NPAs), M Devaraja Reddy, All India President of ICAI told Deccan Herald.

“The Chairman of the banks appoint only those CAs, who they are comfortable with. This is one of the reasons for surging NPAs in Indian banks,” said Reddy. Earlier, the apex bank used to select central statutory and joint auditors based on the advances of banks.
Colluding with banks

Institute of Chartered Accountants of India (ICAI) will take a strong action against the Chartered Accountants, if found colluding with the banks to hide non-performing assets, he said.

“We have sent a questionnaire to all our fellow chartered accountants. We are awaiting their responses. If found colluding with banks, we will take action against them,” he added. According to reports, the gross NPAs ratio steadily declined from 15.7% in 1996-97 to 2.36% in 2010-11. However, the amount of non-performing assets witnessed spurt subsequently and as on March 2015, it was at 4.62% of the gross advances of the banks in comparison with 2.36% of the gross advances as at March 2011. The growth in NPAs was much higher than the growth in advances during the last four years.

The total NPAs of the PSBs stood at Rs. 3.42 crore as of September 2015, which is almost 5.08 of their total loans.

Reddy was in Bengaluru to inaugurate a seminar on Bank Branch Auditing, organised by Bangalore Branch-Southern India Regional Council (SIRC) of ICAI.  He was accompanied by Nilesh Shivji Vikamsey, Vice-President, ICAI and E Phalguna Kumar, Chairman, Bangalore Branch-SIRC.