PMC Bank crisis: ICAI to probe auditors’ role

The crisis at PMC Bank is understood to have been precipitated as it was funding a clutch of companies, mainly in the troubled real estate sector.

The Institute of Chartered Accountants of India (ICAI), the body that regulates chartered accountants, on Wednesday said it has initiated an investigation into the role of auditors in the Punjab & Maharashtra Cooperative (PMC) Bank crisis, and will take disciplinary action against its members if found to be involved in the controversy.
The ICAI said it is aware of reports about major financial irregularities and failure of internal control systems leading to downfall of PMC Bank, and considering the magnitude of the crisis, the association in consonance with its role as a ‘regulator’ has triggered its “disciplinary mechanism”.

Under this, the ICAI has written to the bank and the regulatory agencies, including the vigilance department of the Reserve Bank of India and the commissioner of Maharashtra co-operative societies, requesting them to provide requisite details of their findings along with details of any member/firm allegedly involved.

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“ICAI has also written to the statutory auditor of PMC Bank pertaining to financial years 2017-18 and 2018-19 seeking clarification on the matter. ICAI would be actively pursuing the issue with the concerned regulators so as to examine the matter in detail and would take action through its proactive disciplinary process against any member, if found to be involved in the matter,” it said.

The crisis at PMC Bank is understood to have been precipitated as it was funding a clutch of companies, mainly in the troubled real estate sector. Housing Development & Infrastructure (HDIL) was one of these companies. Earlier this year, HDIL was dragged to the insolvency tribunal by Bank of India to recover its loans. Later, HDIL arrived at a settlement with the bank to stay out of NCLT.