The Reserve Bank of India (RBI) has banned chartered accountant firm Haribhakti & Co from auditing regulated companies for a period of 2 years with effect from April 1, 2022. 

The banking sector regulator said it has taken this action against the firm for failure to comply with a specific direction issued by the RBI with respect to its statutory audit of a Systemically Important Non-Banking Financial Company (NBFC).

This is the first time that the RBI has taken such action against an auditor of any systemically important NBFC.

“The Reserve Bank of India (RBI) in the exercise of the powers vested under section 45MAA of the Reserve Bank of India Act, 1934, has, by an order dated September 23, 2021, debarred M/s Haribhakti & Co LLP, Chartered Accountants (ICAI Firm Registration No 103523W / W100048), from undertaking any type of audit assignment/s in any of the entities regulated by RBI for two years with effect from April 1, 2022,” it said.

The RBI, however, did not name the NBFC.

The action, though, will not impact audit assignments of Haribhakti & Co LLP in RBI regulated entities for the financial year 2021-22.

Incidentally, Haribhakti is the auditor of several financial institutions including Axis Bank and IndusInd Bank. It was also the auditor for Srei Infrastructure Finance Ltd & Srei Equipment Leasing till September 2022. RBI had recently superseded the boards of these two companies on account of governance issues and defaults in payment obligations. 

In 2019, the RBI had imposed a one-year ban on SR Batliboi & Co, an affiliate of global auditing firm EY, after it detected several lapses in the audit report of a bank.