RBI bars Haribhakti & Co from auditing regulated entities over SREI role

The Reserve Bank of India (RBI) has barred Haribhakti & Co LLP from undertaking any audit assignments for central bank-regulated entities for 2 years w.e.f April 1, 2022. The central bank's action against the company is in relation to its role as auditor of SREI group, sources informed CNBC-TV18.

"The Reserve Bank of India (RBI) in 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 a period of two years with effect from April 1, 2022," the RBI said in a release.

"This action has been taken on account of the failure on the part of the audit firm to comply with a specific direction issued by RBI with respect to its statutory audit of a Systemically Important Non-Banking Financial Company," it said.

This is the first debarment done under Section 45MAA of the RBI Act, 1934. This section gives RBI the power to take action against auditors for failure to comply with its directions.

Haribhakti is the auditor of several financial institutions in India, according to exchange filings. The CA firm was the auditor for Srei Infrastructure Finance Ltd & Srei Equipment Leasing till September 2022. RBI has recently superseded the board of SREI group companies after governance concerns and defaults.