December 12, 2005
The Managing Director
[All NBFCs including RNBCs with public deposits/deposits
of Rs 50 crore and above]
Dear Sirs,
Rotation of partners of the statutory
auditors audit firm - with public deposits/deposits of Rs 50 crore and
above
The need for good corporate governance has been
gaining increased emphasis over the years. Globally, Companies are adopting
best corporate practices to increase the investors confidence as also that of
other stakeholders. Scrutiny of the books of account conducted by auditors rotated
periodically would add further value in strengthening corporate governance.
2. In this context, it would be desirable
if NBFCs (including RNBCs) with public deposits/deposits of Rs 50 crore and
above, stipulate rotation of partners of audit firms appointed for auditing
the company. The partner/s of the Chartered Accountant firm conducting the audit
could be rotated every three years so that same partner does not conduct audit
of the company continuously for more than a period of three years. However,
the partner so rotated will be eligible for conducting the audit of the NBFC/RNBC
after an interval of three years, if the NBFC/RNBC, so decides. Companies may
incorporate appropriate terms in the letter of appointment of the firm of auditors
and ensure its compliance.
Yours sincerely,
Sd/-
(P. Krishnamurthy)
Chief General Manager in-Charge