Tag: cii

‘Govt has met 38% of FY22 exports target’, BFSI News, ET BFSI

Personal Finance

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Hyderabad: The government has set an ambitious target of USD $400 billion exports for financial year 2021-22 and 38% of this target has already been achieved by August, said Srikar K Reddy, joint secretary, department of commerce, ministry of commerce and industry, while addressing participants at the CII MSME Summit virtually on Thursday.

Reddy pointed out that the government is keen to provide more market access to Indian companies, specially MSMEs, by inking free trade agreements (FTAs) with certain countries. The government is fast tracking FTAs with countries like UAE, Israel, European Union, UK, Australia and Canada.

On Covid-19’s impact on MSMEs, he said various studies have shown that MSMSE’s were severely impacted and over 90% of them faced challenges pertaining to liquidity, labour, raw materials and logistics.

Sameer Goel, chairman, CII Telangana, said MSMEs play an important role in the overall economic growth and therefore the development of this segment is extremely critical to boost employment.



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TN budget historic, growth oriented: CII

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Confederation of Indian Industry (CII) on Friday termed the budget presented by the Tamil Nadu government as ‘historic’, ‘transformational’ and ‘growth oriented’ with thrust on ‘inclusive development’.

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Government will do ‘everything’ to revive growth, says finance minister, BFSI News, ET BFSI

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NEW DELHI: The government is committed to doing everything that is required to revive the economy, finance minister Nirmala Sitharaman said on Thursday as she assured industry about the Centre’s commitment to reforms and urged India Inc to come out in a big way and show its risk taking abilities.

Addressing the annual session of the Confederation of Indian Industry (CII), Sitharaman also said the government and the RBI will both push growth and take all necessary steps to keep inflation contained.

“Government’s commitment to recovery is shown in so many different ways and we are going to continue doing that because recovery and its sustainability is something which the PM is very keenly invested in,” said Sitharaman.

“I am not looking at growth versus inflation. We shall attend to inflation and keep it contained, take all the necessary steps but never forget the fact that growth is that will make all the difference to the economy’s revival, growth will eventually remove poverty and bring in a level-playing field for all Indian citizens,” FM said, adding that both the Centre and RBI are working as partners to address issues linked to the economy.

She said the messages and the indications that are coming in are very clear that the economy is revving to come out. The FM said the financing needs of the growing economy have been successfully met by the over Rs 5 lakh crore of capital, which was put in the hands of various stakeholders through the credit outreach programmes of the government.

Sitharaman also said the economy has not reached a level where the liquidity which was pumped in during the pandemic can be pulled back.

“I don’t think we have reached that level and I am glad that RBI has been voicing that understanding that too quick a retrieval or sucking out of the liquidity from the economy may not do the necessary stimulus, which is required. I am glad that RBI has kept that understanding and they have not given any indication about wanting to suck out the liquidity which is available there,” the FM said.

Sitharaman cited the passage of crucial bills in Parliament in the just concluded monsoon session as the government’s commitment to push ahead with reforms. The FM made it clear that the government will push through stake sales in all the companies such as Air India, BPCL this year as well as proceed with the asset monetisation plan. “Policy-driven disinvestment and privatisation will continue with the same fervour,” said Sitharaman, adding that “necessary rigorous work is going on and the government is committed to the disinvestments announced in the budget.

The FM urged the industry to venture into new areas and take decisions to expand.

“I thank the Indian industry for being very level headed to face the challenge of the first and even face the challenge of the second wave of Covid-19 when many countries are still wondering how they would face their economy and pick the economy from where it is left behind,” said Sitharaman.

“Indian industry is moving into totally new areas. It is time for the Indian Industry to come around in a big way and it is time to show its risk-taking capacity”, said Sitharaman, adding that the stock market was showing the way. “Please do follow it,” said the FM.



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RBI may not relent on ‘game-changing’ joint audit of banks, NBFCs, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India may not relent on its new norms that mandate joint audit of banks and NBFCs above a threshold and auditor rotation despite widespread opposition from banks, NBFCs and auditors.

The central bank sees it as a game-changing move, which will ensure the independence of auditors and increase opportunities for firms, according to a report.

According to RBI, the guidelines are compulsorily applicable to only 300 NBFCs, out of the 9,600 in India, and other NBFCs with asset size below Rs 1,000 crore can continue with the existing system.

The statutory auditors of public sector banks, financial institutions already have a tenure of three years, and RBI has reduced the tenure of private bank auditors from four years to three, according to the report.

The six-year rotation policy of auditors is in place for private and foreign banks which has been extended to NBFCs.

Audit firms at loggerheads

Top multinational auditing firms in the country are at loggerheads with their Indian peers once again, with the former lobbying to make the Reserve Bank of India reconsider its latest auditing regulations that open up new opportunities for smaller Indian firms.

The new guidelines will curtail growth opportunities for multinational firms and create substantial transitional issues, but Indian firms a chance to get more audit business from the lucrative financial sector currently dominated by the Big Four.

Multinational auditors have started reaching out to RBI, industry associations like CII and FDCI, and even larger financial companies to highlight transition problems and risks of joint audits.

Indian firms have launched a counter-offensive by supporting the central bank’s move and taking their case to the regulator and financial companies directly and through industry associations such as Assocham.

The RBI regulations

On April 27, the RBI released new guidelines for statutory auditors of financial entities to enhance the independence of auditors and tackle concentration issues. The guidelines require mandatory rotation of auditors after three years with a six-year cooling-off period, and appointment of joint auditors in entities having asset size of Rs 15,000 crore and above.

The opposition

The regulations ran into opposition from bankers and auditors who wanted it to be deferred citing less time to appoint auditors and crunch. “The new guidelines have come in at the end of April. We have to evaluate how we can sort of look at appointing new auditors so quickly.

Because the RBI guidelines say that existing auditors cannot continue (auditing) if they have done three years. I think in the case of most companies (non-bank lenders), the auditors would have already done more than three years, probably done four years… So, I hope that RBI defers this applicability by year or so because the year has already started, and a lot of them would have to start looking around for new audit firms,” Keki Mistry, MD and Vice Chairman Keki Mistry had told ETCFO.

“Many challenges here if implemented from FY22. Some bank auditors have already finished three years — they will only have weeks to make a new selection. The pool available to choose from will be limited for FY22 and many potential suitors would be conflicted under the new one-year cooling-off period having done such non-audit services in FY21,” Grant Thornton Bharat CEO Vishesh Chandiok had said.



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Uday Kotak, BFSI News, ET BFSI

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NEW DELHI: The decision to relax partial lockdowns and restrictions imposed by various state governments to contain second wave of Covid-19 pandemic should be based on the advice of experts as the July-September period is going to be crucial for the nation, said CII President Uday Kotak.

As vaccination drive picks up in July-September and positive cases come down on account of current restrictions and partial lockdowns imposed by various state governments, the main challenge would be to take a decision on opening up the economy, he said.

“After vaccination picks up, what do we do? Do we open up or be cautious? So, that will be the trade-off which will be crucial between July and September in the race between vaccination going up, current positivity rate remaining low.

“But, the worry that if you open up too soon, we will get COVID 3.0 quickly and that is the trade-off for which we need to take a calibrated call, not today but in the second half of June,” Kotak told PTI.

The decision to open up should be taken on the advice of experts based on scientific evidence, he said adding that the July-September period needs to be handled with care.

“Let us get scientists and experts to do their analysis and then take the call based on expert advice. One of the challenges, I feel, we in India face is that many people take decisions without depending enough on expertise.

“I would rather depend on expertise and based on that, take the right decisions,” he said.

As per estimates, he said, by August, India should be produce about 15 crore vaccines per month, and there is a decent hope that post-September and October, India would be vaccinating a lot of people.

“What is really the issue is this 3-4 months hiatus which we have now is the challenge that we need to handle with care because post-COVID 2.0, most states have effectively curtailed economic activities,” he added.



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ICAI says Reserve Bank’s new auditor norms to enhance audit quality, BFSI News, ET BFSI

Banking & Finance

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Chartered accountants’ apex body ICAI on Wednesday said Reserve Bank‘s new norms for appointment of auditors will help bring in a large number of capable audit firms into the banking and financial sector auditing works as well as enhance audit quality. Noting that the norms are in the “right direction”, ICAI President Nihar N Jambusaria said apart from audit quality, the norms will enhance “auditor independence and strengthen corporate governance”.

In April, the Reserve Bank of India (RBI) came out with the norms for appointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) of commercial banks, Urban Co-operative Banks (UCBs) and Non-banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs).

Issuing a detailed statement, the Institute of Chartered Accountants of India (ICAI) said harmonising norms for appointment of auditors of various entities in the financial sector is the right step towards ensuring independence and transparency in the selection of auditors resulting in enhanced audit quality.

“ICAI has always stood for joint audit as the concept has always worked well for improving audit quality and reliability apart from having fresh perspective from new firms.

“Further, the joint audit will ensure due continuity in the audit process as one of the firms is continuing during rotation. It has an advantage of utilising technical expertise pooled in from participating firms. This also enables each of the joint auditor to focus better on its area of expertise and mitigate systemic risk,” it said.

Further, it said that rotation of audit firms after three years is already prevalent in Public Sector Banks (PSBs) and it was introduced in large companies on completion of five-year cycle by the Companies Act, 2013, “which proved to be effective”.

“Similar rotation of audit firms in other large intermediaries of banking and financial sector will surely result in improved audit quality apart from having fresh perspective,” Jambusaria said.

The new norms will bring in large number of capable audit firms into the banking and financial sector audit, he said adding there is no dearth of talent and the new RBI norms will be taping into the unutilised talent pool in the fraternity.

“Presently, only 10 per cent of the eligible CA firms are appointed as SCAs and with the relaxed norms, the number of eligible firms is expected to increase by three times. This will help the corporates choose their auditors from a larger pool from a location of their choice,” he pointed out.

Regarding restrictions on audit/ non-audit services for related entities, ICAI said it is largely aligned with the institute’s Code of Ethics and the principles in the Companies Act.

The reduction in the tenure of audit engagement and cap on number of audits an audit firm can conduct in the banking and financial sector will not only lead to enhanced audit quality but also capacity building of audit firms, it noted.

The ICAI President also said RBI should prescribe minimum number of SCAs that can be appointed by PSBs instead of maximum since in the past, the actual number of auditors appointed was quite less than the prescribed maximum.

“As per the present norm, compulsory cooling for 3 years of an SCA of a PSB is with that bank only. Instead of that, it should be mandated across all PSBs,” he said.

On Sunday, industry body CII had urged RBI to review its circular regarding appointment of auditors.



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CII wants RBI to review circular on appointment of bank, NBFC auditors, BFSI News, ET BFSI

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Industry chamber CII has asked the Reserve Bank to review its circular on appointment of auditors for banks and NBFCs saying it was inconsistent with the provisions of the Companies Act and would create hardship for businesses in times COVID.

The Reserve Bank in its circular on April 27, 2021 imposed various restrictions on appointment of auditors by banks and NBFCs and prescribed a cooling off period for re-appointment.

Urging the RBI to review the circular, the Confederation of Indian Industry (CII) said the proposals “will cause significant hardship to the companies, its stakeholders as well as industry in general”.

The chamber said that few matters that warrant an immediate attention of the RBI include a clarification that the circular is only intended to cover banks and NBFCs and their respective audit firms.

“The RBI may not apply the same principles to the commercial banks and NBFCs, including in respect of cap on maximum number of audits, mandatory joint audits, and rotation/cool off principles. The NBFCs may continue to be governed by the Companies Act, 2013,” it said.

It also suggested to re-consider severe restrictions on capacity and eligibility requirements, limit on number of audits, maximum engagement period of 3 years and 6 years cool off period after rotation.

“The RBI may consider aligning them with the provisions in the Companies Act, 2013. The RBI may still achieve its objectives, without diluting any of the principles,” it said.

The chamber further asked for review of definition of related parties, which as per the circular include the group entities using a common brand name as this has far reaching implications and unintended consequences; and restrictions on audit/non-audit services during one year before/after the appointment as auditors of a bank/NBFC, covering the entity and its group entities.

“These provisions may create severe capacity constraints, without adding any qualitative parameters,” CII said, requesting the RBI to help in facilitating an effective implementation of regulation, without disrupting the ease of doing business.

It also said that a sudden change in major policies, without any reasonable transitional provisions, is bound to create several practical challenges in successful implementation.

“It should also be noted that appointment of auditors is a critical and important process for an organisation and merits right level of attention especially from senior management, board and audit committee, and approval from RBI,” CII said.

It added that all these amendments will create inconsistent policies without adding any qualitative parameters.

“It is all the more challenging in present times, severely impacted by COVID-19, to implement these requirements without any transitional provisions,” it said.



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