Most of banks have adopted Core Banking solution (CBS) technology and are now using system to recognize Non Performing Assets, stressed assets, toxic assets, bad assets, and restructured assets. Now there is very little scope to hide bad assets until clever bankers in collusion with technology experts taper with the system and conceal NPA. None can however deny the foul game being played with the system by bankers to conceal bad assets from balance sheet and to present rosy picture of banks.
But the bitter truth is that Team of Chartered Accountants who have been carrying out Statutory Audit of banks as per RBI directives for decades have completely failed to perform their duty of exposing NPA for which they were appointed by RBI and public sector banks. Rather it is CA who helps bank officials in sanction of loan to unscrupulous business men by preparing rosy balance sheet as per credit policy of respective banks.
It is CA who used to treat and certify even bad assets as standard assets in collusion with bank officials. If CA are given costly gifts and treated like state guest and if CAs are served like ‘Damad – son-in-laws’ during conduct of audit they may blindly put their signature on Audit reports without looking into accounts.
It is open secret that it is CA who certified all past balance sheets of all PS banks where NPA were concealed, lesser provision was made and where profit was inflated by clever bankers to please Ministry of finance. It is worthwhile to mention here that volume of NPA of almost all banks have exhibited a big jump only after adoption of system generated mechanism to recognize NPA. And it is well known to all that NPA was not created overnight but was accumulated in last two decades of reformation era by clever bankers in nexus with team of CA only.
CA could not stop foul game of bank officials in recognition of bad assets during last four decades when everything was being done manually. One cannot therefore dream corrupt team of such CAs can stop tapering of system if at all undertaken by bank officials to hide bad assets.
Now therefore when system generated NPA is declared, there is no use of carrying out statutory audit of banks. I am of categorical view that conducting statutory audit of banks was absolutely futile and costly exercise undertaken by banks only to fulfill RBI norms. On an average bank used to spend Rs.20000 to Rs.50000 on each audit and almost similar amount in unofficial way through illegal means. A prudent banker and RBI regulator can imagine the volume of spending on useless statutory audit in about 25000 branches out of total 90000 branches of all banks. Not only this These CA use to cause loss of manpower and cause tension to bank officials during all such audits.
Hence RBI should immediately stop mandatory statutory audit of banks and this will save crores of rupees of banks which are being spent on auditors. In addition RBI should also consider stopping Revenue audit of branches being carrying out by Chartered Accountants merely to fulfill RBI mandatory requirement. Revenue Audit entrusted to CA team by banks are actually carried out by article clerk whose knowledge is negligible . Since the payment of revenue auditors is not that much as in case of statutory audit, CA do not like to even visit the branch and sign on report of article clerk blindly.In both the cases CA in most of the case simply sell their signature and blindly certify all evil works if treated like Guest and awarded with costly gifts.
Internal auditors in all banks are doing adequate exercise to stop leakage of income and hence it is they who should be provided more and more support of manpower and infrastructure to stop leakage fully and to ensure absolute recognition of Non Performing Assets and true income recognition as per RBI norms.
In case of need cross checking of banks through officers of other banks and that of RBI may be resorted to in ensuring correctness of balance sheet. Further surprise audit of banks by honest and devoted RBI officials may prove helpful in creating fear among bad bankers.
It is also true that officials of RBI or CBI or CVC are beards of same feather as CAs are. Even then it is better to come out of clutches of team of CAs who are in general (excluding some Good CAS) consistently blackmailing not only bankers but all assesses on every point for their vested interest and it is they who help in tax evasion and creation of black money . It is CAs who convert black money into white money by way of manipulation in every deal for purchase and sale of landed property.