Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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AV Bagur Advocate (Advocate )     19 December 2013

Banks told to proceed against cas of npa

The Reserve Bank of India has instructed banks to lodge formal complaints against Chartered Accounts of firms which have become Non Performing Assets.


The banks require borrower companies and business houses to periodically provide statements of accounts, balance sheets, inventory positions, stock statements and other details to monitor the health of the borrower company. These are generally given by the borrower and ex-facie accepted by the banks – that till now.


The RBI in its discussion paper, on which it has sought comments from the general public by 1-1-2014, has advised the banks to make it their standard operative procedures to lodge a formal complaint to the ICAI against the CAs of firms that have become NPAs, if, according to bank’s assessment, the statements and data provided by the firm was inaccurate, cooked up or dressed up.


The banks have been further advised to create a master data base of such CAs and share amongst themselves the information about such CAs.


On the face of it there is nothing wrong in what has been said in the discussion papers. There is nothing wrong in proceeding against unscrupulous CAs who cook up balance sheets and other statement of accounts to help their clients get advances that they should not have got in the first place. In fact it is because of these cooked up figures that investors have lost confidence in the statistical data dished out by the companies about their performances (Satyam case).


But if we look at the ground reality of implementing various pieces of legislations aimed at reducing the levels of NPAs, the situation is far from satisfactory. The manner in which the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI ) Act, 2002 is being used and misused and abused should tell us a lot on what is the judicial acumen or ethical attitude or impartiality of bank officers in such matters. Same would be the fate if bank officers are allowed to lodge complaints against the CAs and then “share the information" amongst themselves. The CAS would be condemned even before he would have had an opportunity to present his side of the case.



Para 7.2 of the discussion paper reads as under:


Banks will have to strictly comply with the existing instructions about formal lodging of complaints with ICAI against company auditors in case of observance of falsification of accounts/wrong certification of stock statement/end-use certificate etc. Pending disciplinary action by ICAI, the complaints will also be received in the RBI for records. The names of the CA firms against whom many complaints have been received from different banks may be flagged for information of all banks. Banks should consider this aspect before assigning any work to them. The names may also be shared with other regulators/MCA/CAG for information.


The bank officers, at any level, cannot be a deciding factor on the culpability of a professional in an account becoming NPA. There must be some principles of natural justice followed even before a formal complaint is lodged with the ICAI. The banks can “share” such an information amongst themselves only if the ICAI upholds the complaints of the bank, but not otherwise.


If this is not done, then very few firms/ borrowers will be able to get any report from the CA. This will again defeat the growth of credit and economy. And there is an imminent danger of small time borrowers being extorted of huge amounts by unscrupulous CAs for giving such reports, while big time borrowers will hire a chain of CAs and use them as cannon fodder to get the kind of reports they need.


Many individuals may not be able to collate their views and express it to the RBI in time.  BankDRT   is compiling views on the subject and will be submitting it to to the RBI for consideration.   Hope the RBI will incorporate suitable clauses to achieve a balance between unprofessional CAs and bank officers.


 5 Replies

mir manzoor (M D)     13 February 2014

dear sir

i am mir manzoor

my a/c is npa Rs 19 lacs

bank suit file against me Rs 3o lacs

mir manzoor (M D)     13 February 2014

dear sir

i am mir manzoor

my a/c is npa RS19 lacs


mir manzoor (M D)     13 February 2014

dear sir

i am mir manzoor

my a/c is npa RS19 lacs


MANOJ HARIT (LAWYER)     16 February 2014

Contact a good lawyer.

If the suit is filed in DRT Mumbai u may contact Adv. Manish Bohade - 9371505560. 


I am a defence pensioner. My bank allegedly paid my DCG, Commutation etc twice in two different accounts in 2010. But detected it in Aug 2013. PCDA allahbad is my pension issue auth. They had no knowledge. Bank did not intimate them but asked me to pay the money back with interest. Within another month without waiting for orders from PCDA the bank excercised banker's Lien and force closed all my FDRs held in that bank amount much higher than the alleged over payment. I am fighting issue with BO which found no deficiency in service with filed an appeal to RBI Dy governor. 

My query is ..If the bank has so much of power vested on it in terms of General Lien why it did not excercised it against the NPA defaulters mainly big big desi industrial houses who have Antilla built from the banks'  Loans. Why the banks just donot force closed all the FDRs etc held in any bank in any name related to the NPA defaulters. Why bank shows so much of clout to the hapless defence pensioners only. What is the latest rulings of the Indian High Courts as well as the Apex Court on the issue of RECOVERY OF NPA forced closing all FDRs.

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