RBI – New Guidelines on Concurrent Auditing at Branches

The ‪Reserve Bank‬ on Thursday said the concurrent audit at bank branches shouldcover at least half of their advances and deposits.

The concurrent audit system is regarded as part of a bank's early warning system to ensure timely detection of irregularities and lapses.


"Concurrent audit at branches should cover at least 50 per cent of the advances and 50 per cent of deposits of a bank," RBI said in a notification.

It said branches rated as high risk or above in the last risk-based internal audit (RBIA) or serious deficiencies found in internal audit are subject to concurrent audit.

The audit will also be applicable on all specialized branches like large corporate, mid corporate, exceptionally large/very large branches, SMEs and all centralised processing units like loan processing units (LPUs).

Besides, it would include service branches, centralized account opening divisions, wealth and portfolio management services, card products divisions, data centres and treasury/ foreign exchange business, investment banking, among others.

The concurrent audit also helps in preventing fraudulent transactions at branches.

The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down, the RBI said.

The scope of concurrent audit should be wide enough or focused to cover certain fraud-prone areas such as handling of cash, deposits, advances, foreign exchange business, off-balance sheet items, credit-card business, Internet banking, it added.

The regulator said appointment of an external audit firm for concurrent audit may be initially for one year and extended up to three years, after which an auditor could be shifted to another branch, subject to satisfactory performance.

IMPORTANT NEWS & UPDATES FOR CHARTERED ACCOUNTANTS - 20th Aug 2015

➡ IMPORTANTS NEWS

1. Govt. notifies 'Challan No. ITNS 284' for depositing taxes under Black Money Act.

2. RBI grants approvals for 11 payment banks including Reliance, Airtel, Vodafone

➡ INCOME TAX

1. Compounding fee paid to Municipal Corporation is in nature of penalty disallowable.

2. 60 taxmann.com 287 (Chennai - Trib.) ITAT allows sec. 11 tax exemption to Tamil Nadu Cricket Association.

3. High Court has inherent power to review its own judgment, says Supreme Court.

4. 60 taxmann.com 135 (Bombay) No concealment penalty if sum treated as capital receipt was disclosed in notes to accounts and return.

➡ BANKING AND CORPORATES LAWS
1. 60 taxmann.com 285 (SAT - Mumbai) Where in guise of running real estate business, PACL was running sham Collective Investment Schemes (CIS) which were detrimental to interest of investors, decision of SEBI directing PACL to wind up existing CIS and refund money collected from investors with promised return could not faulted.

➡ CST AND VAT LAWS
1. 60 taxmann.com 123 (Gujarat) Gujarat VAT - Where Assessing Authority cancelled registration certificates of assessee on ground that alleged purchases made by it from two dealers were bogus and not genuine and even assessee had indulged into billing activities only, registration certificates had been rightly cancelled.

➡ SERVICE TAX AND EXCISE LAWS.
1. 60 taxmann.com 122 (SC): Wharfage charges and lease rent recovered by port authorities cannot be regarded as 'service' in relation to 'a vessel or goods' and cannot be said to be a service provided by 'port or person authorised by it'; hence, same is not liable to service tax under port services.

2. Excise :No personal penalty on directors where issue relates to interpretation of law and situation is revenue neutral.

- CA Kasliwal Ambar

The Reserve Bank of India (RBI) today granted in-principle nod to 11 payment banks applicants.

RBI grants in-principle nod to 11 cos for payment banks. The central bank has approved applications of National Securities Depository Limited (NSDL), Reliance Industries, Aditya Birla Nuvo, Airtel M Commerce among others.

A payment banks differs from conventional banks as it cannot lend to its customers. It is allowed to take deposits, allow remittances and provide simple financial products.

Name of other applicants that have received nods:

- Department of Posts

- Fino PayTech

- Tech Mahindra

- Vodafone m-pesa

- Cholamandalam Distribution Services

- Paytm's Vijay Shekhar Sharma

- Sun Pharma's Dilip Shanghvi.

The RBI's “in-principle" approval will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the central bank.
These companies selected will be given "in-principle" approval for 18 months, after which they will be given licences if they fulfil all conditions stipulated by the RBI.

A total of 41 companies had applied for the permit, the RBI said, adding "some of the entities who did not qualify in this round, could well be successful in future rounds."

Payments banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

They are part of India's financial inclusion push, meant to bring banking services to a country where less half the adult population has a bank account.

Dos of payments banks

* Has to use the word ‘Payments Bank’ in its name to differentiate from other banks

* Accept demand deposits, i.e., current deposits, and savings bank deposits from individuals, small businesses and other entities

* To hold a maximum balance of Rs one lakh per individual customer.

* Will be allowed to set up branches, ATMs, BCs

* Allowed to issue debit cards also offer internet banking

* Can accept a large pool of money to be remitted but at the end of the day the balance should not exceed Rs one lakh

* Can accept remittances to be sent to or receive remittances from multiple banks

* Permitted to handle cross border remittance transactions in the nature of personal payments / remittances on the current account

* Allowed to distribute mutual fund products, insurance products and pension products

* Bank can also undertake utility bill payments

Don’ts of payments banks

* No NRI deposits should be accepted    

* Cannot issue credit card

* Not allowed to set up subsidiaries to undertake non-banking financial services activities    

* Other financial and non-financial services activities of the promoters should not be mingled with the working of payment banks