The Reserve Bank of India (RBI) has banned the audit firm SR Batliboi & Co. LLP, a member firm of EY, for one year from auditing commercial bank books, after the central bank found lapses in a statutory audit.
"On account of the lapses identified in a statutory audit assignment carried out by the firm, M/s S.R. Batliboi & Co. Llp., chartered accountants, it has been decided that RBI will not approve the said firm for carrying out statutory audit assignments in commercial banks for one year starting from April 1, 2019," the regulator said in a statement.
Here's a look how this would impact the banking sector.
1. Audit firm SR Batliboi & Co audited more than 250 companies in fiscal 2018, a majority of them belonged to other fund based financial services (as per CMIE classification) with banking services firms managing a share of 3 per cent.
2. According to the CMIE data, the firm has been the auditor in less than 10 banks for the past five years. In FY18, it audited 8 banks compared to 6 in the previous fiscal.
3. Currently, only foreign and private banks are audited by this firm. Of the eight banks audited in 2017/18, four were foreign banks such as Mizuho Bank, Barclays Bank Plc; three were private sector lenders namely Axis Bank, Kotak Mahindra Bank and South Indian Bank and one payments bank, Aditya Birla Idea Payments Bank. SR Batliboi has also audited books of ICICI Bank and Yes Bank in the past.