Bank’s Internal Policy mandatory for CA certified documentation for Loan Advances: RBI responds to RTI Application [Read RTI Reply]

Bank’s Internal Policy - CA certified documentation - Loan Advances - RBI - RTI Application - Taxscan

The Reserve Bank of India (RBI), while responding to the RTI Application said that the Internal Policy of the bank mandates for CA-certified documentation for Loan Advances.

The query raised was in case of existing/proposed loan/advance is it mandatory to get Chartered Accountants certified/attested/verified/confirmed Provisional/Tentative/Projected financial statements for the current year or future year. In case yes, please provide relevant citations/rules under which the Bank enforces the customers/clients to get CA certified Provisional/Tentative/projected Financial Statements.

Yet another issue was that in case of loan/advances proposal for Individuals/Firms/LLP which has filed Return of Income based on Presumptive Basis of Income as provided under Section 44AD/ADA of Income Tax Act, 1961, Banks enforces the client/customers to get Financial Statements certified/attested/verified/confirmed by Chartered Accountants.

Whereas in Income Tax Returns Individuals/Firms/LLP has declared in Income Tax Returns that they have not maintained books of accounts. Still the bank insists rather enforces clients/customers to get Financial Statements certified/attested/verified/confirmed. Please provide relevant citations/rules under which the Bank enforces the customers/clients to get CA certified Financial Statements.

The RBI clarified that it has not issued any specific instructions in this regard. It may be noted that the management of loan sanctioning or recovery activity in a bank is essentially an internal management function and each bank’s Board is authorized to frame suitable policies.

Banks have been advised to prepare a well-defined loan policy approved by their Board of Directors subject to the instructions contained in our Master Circular on “Loans and Advances Statutory and Other Restrictions” dated July 1, 2015 which is available on RBI’s website under the head ‘Notifications’.

“In case of grievance against any particular bank, a complaint may be lodged with the branch of the concerned bank or its controlling office. If the complaint is not redressed within one month, a complaint can be made to the Banking Ombudsman, under the Banking Ombudsman Scheme, 2006. The details of the Banking Ombudsman Scheme are available on RBI’s website,” the RBI added.

As per SBI, it has an internal policy that mandates CA-certified documentation.

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