The State Bank of India (Amendment) Bill 2010 contains a provision that will further limit the Reserve Bank of India’s powers on bank auditor appointment. The provision allows SBI to appoint its own statutory auditors. The Central Government too will have no say in the appointment of statutory auditors of SBI.
At present, the RBI appoints auditors for SBI in consultation with the Government. If and when the Bill is passed, the RBI will have to cede this power to SBI. “The Government is doing to SBI what has already been done for other public sector banks,” banking industry sources said.
The proposal is in line with the autonomy package already awarded to public sector banks in 2008-09. Under this package, the senior management of public sector banks was empowered by the Government to decide on the auditors.
The latest move is a blow to the Institute of Chartered Accountants of India (ICAI), which has been saying that it is not a practice for directors of a bank to appoint auditors as it impinges on auditor independence. The ICAI has been making a case for auditor appointments in banks to be centralised with the RBI.
“This is obnoxious. Again bank managements are trying to take this (power to appoint auditors) into their own hands. It will only dilute the independence of auditors. This may not serve the cause of public interest.
Autonomy in policy decisions like setting of interest rates can be allowed. But there is also greater need for checks and balances. Auditor appointment from outside provides such checks and balances,” Mr Amarjit Chopra, ICAI President, told to media.
Recently, Mr Chopra had, in the context of public sector banks, called for a reversal to the earlier system where the RBI makes the auditor appointment. “We must go back to the system where the RBI decides on the auditors for state owned banks,” Mr Chopra had said.
The State Bank of India (Amendment) Bill 2010 was introduced by the Finance Minister, Mr Pranab Mukherjee, in the Lok Sabha on Monday.
We are harvesting the poison fruits of our illustrious brothers i.e, PWC -Lovelock & Lewis etc .
Audit has been reduced to a farce and Auditors to objects of PITY with the ICAI just a spectator.
Better dissolve the ICAi.
it is against the independence policy of audit made by govt , if it happen then govt should dissolve the icai which has no purpose . so govt should be alert this system of ” bhai bhatiza baad.
If you have influence and pay commission you can get SBI audit. Also if any one of the director is your father in law SBI Bank audit is encumbrance free dowry
The change which was effected two years back is already showing on the problems being faced by the banks as well as the firms of chartered accountants wherein the auditors have to keep approaching a number of banks and the bankers have to scumb to a lot of pressures and incentives. I am sure the persons getting appointed by such route would not be able to raise their views in-spite of the level of merit in the same.I noticed that the banks also preferred to appoint inexperienced firms as they would not be able to raise any issue. However, they fail to appreciate that the process will deprive them from a valued experience which could have benefited them in many ways.
The process would be harmful for the new firms also as they would not be able to exercise their professional competence with complete independence.
Our worthy president has taken this genuine step and we should back him with full strength.
A blow to the Independence in Auditing of entities where huge money is on stake of Public as well as Corporates, in the name of so called ‘Autonomy’. Definition of Autonomy is being taken in a very general way instead of getting in to its after effects.
This is going to have an adverse effect on the audit mechanism, specially in the small stations, where Banks heads knows most of the auditors either personally or in any other way. So, the whole mechanism will get biased. This is a serious matter & steps need to be taken.