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.
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.
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.
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 s
uch checks and balances,” Mr Amarjit Chopra, ICAI President, told to media.
can be allowed. But there is also greater need for checks
and balances. Auditor appointment from outside provides s
uch 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.
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.
was introduced by the Finance Minister, Mr Pranab Mukherjee,
in the Lok Sabha on Monday.
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