Audit of banks...who is responsible?
The governor of the Reserve bank of India appeared before the Parliamentary Standing committee on finance told that the RBI needs more powers to control the public sector banks whose NPA's are increasing significantly. He said that it is impossible for the RBI to audit each and every branch in terms of Audit. But who is responsible for Auditing the banks? The Government is the owner of the Public sector banks(PSB's). This also means that the government appoints the members to the boards of these banks. In the past we have seen less than qualified people being appointed to the helm of affairs at a particular bank. Thus it is difficult for the regulator such as the RBI to do the audit of thousands of branches. The RBI is a regulator who issues guidelines to the auditors to audit. But does the RBI have powers to audit the banks? Yes. Under the Banking Regulation act, RBI has wide ranging powers. But the problem here is dual control. The cooperative banks in India are under ...