In reply to RTI by Nitin Pandurang Hargude on requirement of signing of project report, un-audited financials and certificate for utilisation of loan funds  vide Order No. DOR0021/04.03.001/2020-21 dated April 03 2021 RBI has replied as follows:-

Query 1

Signing on Project Report for Loan Purposes with seal/UDIN of CA thereon. I wish to ask Reserve Bank of India if there is specific circular/notification issued  by them to the commercial banks demanding signing on Project Reports/CMA Report by CAs while advancing New/ Old Loans.

Query 2

Giving certification/ Signing on Unaudited balance sheets and on Income Tax Returns of Clients (for those who dont fall under category of Audit Cases such as Income Tax, Company Act etc) & generating UDIN thereon. I wish to ask Reserve Bank of India if there is specific circular/notification issued by them to all the commercials banks.

Reply to Query 1 & 2:

We have not issued any specific instructions in this regard.

However, it may be noted that credit related issues are mostly deregulated. The Reserve Bank of India has advised banks to have documents of investment policy, loan policy, loan recovery policy etc. prepared and duly vetted by their Boards of Directors. Banks are required to take credit related decisions based on Board approved policies subject to the instructions contained in our Master Circular on “Loans and Advances – Statutory and Other Restrictions” issued vide DBR. No.Dir.BC.10/13.03.00/2015-16 dated July 1, 2015 which is available on our website www.rbi.org.in under the head ‘Notifications’.

Query 3

I wish to ask any policy drafted by RBI with such Banks to get Certificate of Know you customer by CA if client is known to him and validity of the same.

Reply to Query 3

We have not issued any specific instructions in this regard.

Query 4

Utilisation Certificate from CAs. Few banks before sanctioning of loan demand CA certificate about stating facts that client will not utilise the loan for any unlawful/ illegal/ terrorists activities. I wish to know how CA can give such certificate for loan benefits enjoyed by client and validity of the same. I wish to ask Reserve Bank of India if there is specific circular/notification issued by them to all the commercials banks.

All above matters are dealt by the concerned bankers with their own/ potential customers for their respective benefits. I wish to know how come a Professional Chartered Accountant comes into the picture to certify/ validate for the acts performed by independent parties.

In connections to this I urge you to please look into this matter on urgent basis and act to issue reply and on my queries which will impact the large community of professionals like us.

Reply to Query 4

What is being sought is not information in terms of Section 2 (f) of RTI Act, 2005. However, you may refer to query 1 and 2 above.

Download RBI clarification wrt rti query on signing of financials by CAs

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17 Comments

  1. A K V ASU says:

    One of the DSA of bank wanted me sign on the application for loan.Another wanted me sign a certificate that the funds will not be used by the borrower for an immoral purpose.Irequest the institute to issue the various purposes the udin facility can be utilised And the validity period of such certificate by giving wide publicity in media.

  2. Ravichandran says:

    Yes, this is a common demand from the bankers. The ICAI must intervene and provide Advisory, in consultation with the Regulator. Thanks for bringing this up.

  3. CA. M. Lakshmanan says:

    Members should not sign the ITR-V and other financial statements not audited by us. Memebrs can vsit the UDIN in our site wherein we have been advised to give ‘Compilation Report’ in such cases with UDIN.

  4. Jaykumar Zankarlal Pokharna says:

    The issue was raised By CA Nitin Hargude is very useful. Many banks and financial institutions are demanding various certifications on their own drafted template which are not relevant and not part of CA CMA service. Keep it up.

    Your RTI is useful for All CA.

  5. PONNADA SRINIVAS PRASAD says:

    Bankers also face such dilemmas and inconvenience while extending loans and advances. Precisely for such ascertaining CHARACTER CAPACITY CAPITAL appraisal assessment are carried out CA s are paid to conduct thorough verification of all areas parameters and certify objectively as well as subjectively. Cannot escape liability duties citing theory

  6. Sunil K Jain says:

    Same RTI application may be given to Board of Directors of said Bank which banks are asking such certification, thereafter conclusion may be drawn.

  7. Pardeep Jain says:

    In one of my client case Bank ask for CA certificate regarding amount of loan being already availed by the client which bank can easily access through CIBIL report. I deny to issue such certificate as no such documents are available with me

  8. CA Arvindbhai Mistry says:

    Very useful RTI and reply by RBI which supports the denial by CA to sign documents unduly asked by commercial banks for loan and advances to their borrowers.

  9. Raghavendra Bakare says:

    This RTI application was given By CA Nitin Hargude From Kolhapur Maharashtra.

    @Nitin Hargude
    Your RTI is useful for All CA.

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