CHAIRMAN KHADI BOARD, PUNJAB GAVE MEMORANDUM ON BANK AUDIT ISSUE

MEMORANDUM AGAINST RBI’s PROPOSAL TO EXEMPT PUBLIC SECTOR’S BANKS BRANCHES FROM THE PURVIEW OF STATUTORY AUDIT

To,

Her Excellency,

The President of India,

New Delhi,

Through

Deputy Commissioner, Jalandhar

Honorable President,

This has reference to the latest development which is being observed in business, trade, corporate, financial, political and banking sectors that Reserve Bank of India has made up its mind to exempt nationalized bank’s branches which are having total advance up to Rs. 20 Crores, from the purview of audit which is a statutory requirement ever since nationalization of public sector banks.  Her Excellency, we daily used to hear through media or other sources various financial frauds, irregularities which are exposed by the auditors through audit process.  We strongly oppose this proposal of the RBI on the following counts:

1. In public sector banks hard earned money of general public lies in the shape of deposits, saving accounts or other modes.  Banks just act as custodian of this public money and lend advances with this money to earn profits for the benefits of general public.  Audit system is of utmost importance to ensure smooth functioning of banking systems and timely detection of irregularities and frauds and their remedial measures.  If there will be no independent outside agency (auditors) which can have a check on all these matters, then chances of frauds, irregularities will increase manifold and it will ultimately lead to corruption.  On the one hand the government expresses its intention to eradicate corruption, while on the other hand this proposal of RBI will create corruption.
2. If the proposal of limit of Rs. 20 Crores of RBI is implement then majority of bank’s branches (80% to 85%) will be out of purview of audit because in most of the branches there is huge deposits running in hundred crores but advances are nominal because as per Policy of the Bank, huge advances are done at few branches at corporate levels.
3. With this proposal almost all the branches of rural sector will be outside the purview of audit and chances of frauds, irregularities will grow thereat.
4. If due to irregularities, frauds with public money banking collapses, the economy of the country can also collapse as banking is the back bone of any nation’s economy.

In view of the above, we request you to kindly intervene and ensure that any such decision of RBI could be stopped as this can be highly detrimental in the growth of Indian Economy and will increase Corruption in the country.

                                                                                     

Place:   Jalandhar                                                         (Vijay Sampla)

Date :  27/02/2012                                                                     Convener,