The scam at Punjab National Bank has jolted the government to move on setting up a new agency to regulate and discipline auditors, almost five years after the law provided for it. Setting up of the National Financial Reporting Authority (NFRA), a new agency provided for in the Companies Act, will be discussed by the Union cabinet, a move that will take away review and disciplinary functions of the Institute of Chartered Accountants of India (ICAI). The cabinet will discuss a proposal from the ministry of corporate affairs to allow for creation of posts, paving the way for setting up NFRA with a chairman and up to 15 members.
By all accounts, ICAI has been resisting the change as it will be rendered toothless with education and conducting exams being its main role. Several countries have separate agencies to regulate auditors and India had drawn upon their experience. In the US, the task is handled by the Public Company Accounting Oversight Board, while the UK has the Financial Reporting Council.
“There is conflict of interest in the current system, that is why we had thought of separating ICAI’s functions in line with global best practices,” said D K Mittal, a former secretary of the ministry of corporate affairs. Finance minister Arun Jaitley has made public his displeasure with the failure of auditors to check the fraud at the second largest public sector bank.
Firestar Diamond files for bankruptcy
Firestar Diamond, a part of Nirav Modi's international jewellery business, has filed for bankruptcy in the US, blaming liquidity and supply chain challenges, according to documents filed in a bankruptcy court in New York. Firestar isn’t linked to the complaints filed by authorities in India, the company had said in a February 5 email sent through an external spokesperson.
Banks asked to scan bad debts of over £5 million
The government asked state-run banks on to fix operational gaps within 15 days and said lenders must check all bad loan accounts over £5 million for possible fraud. Managing directors of state-run banks have been directed to detect frauds and any willful default in time and refer cases to the CBI. They have also been asked to involve ED and DRI for any foreign exchange violations.
PNB former MD, ICICI ED quizzed
Spreading its net wider, the CBI questioned Allahabad Bank managing director and CEO Usha Ananthasubramanian, who was shunted out of PNB a few months ago, and ICICI Bank executive director N S Kannan, even as the scale of the alleged fraud committed by Modi and Choksi became bigger.
7,000 bank employees transferred in Gujarat
Around 7,000 bank employees have received their transfer letters across Gujarat following Central Vigilance Commission’s advisory asking public sector banks to transfer officers, claims Maha Gujarat Bank Employees Association. These transfers have come soon after the fraud unearthed at Punjab National Bank.
