In a recent response to a Right to Information (RTI) query filed by an individual, the Reserve Bank of India (RBI) has clarified its stance on Chartered Accountant (CA) certification for Know Your Customer (KYC), Bank Loan and Other purposes.
The applicant sought information under the RTI Act, 2005. The Department of Regulation at the Reserve Bank of India replied as follows.
Loan Project Reports and CA Certification:
The RBI stated that there are no specific circulars or notifications requiring commercial banks to demand CA certification for signing on Project Reports or Credit Monitoring Arrangement (CMA) Reports when advancing new or old loans.
Certification on Unaudited Balance Sheets and Income Tax Returns:
The RBI clarified that, similarly, no specific circulars or notifications have been issued to commercial banks regarding the certification or signing on unaudited balance sheets and income tax returns of clients who do not fall under audit categories.
Policy for CA Certification of KYC:
The RBI responded that there are no specific instructions or policies drafted by the RBI for commercial banks to obtain a Certificate of Know Your Customer by a CA, based on the client’s acquaintance with the CA and the validity of such certification.
Utilization Certificate from CAs:
The RBI addressed the query related to CA certificates on the client’s intended use of loans. While not classified as information under the RTI Act, the RBI directed attention to the responses provided for queries 1 and 2.
The RBI’s response emphasizes that credit-related matters are largely deregulated. Banks are advised to have documents such as investment policy, loan policy, and loan recovery policy prepared and vetted by their Boards of Directors. Credit-related decisions should align with Board-approved policies, as outlined in the Master Circular on “Loans and Advances – Statutory and Other Restrictions.”
In conclusion, the RBI’s response signifies that there are no specific directives mandating CA certification for the mentioned scenarios. The clarification aims to provide transparency and understanding for professionals involved in these processes.
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