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CA Final · Advanced Auditing, Assurance and Professional Ethics · Special Features of Audit of Banks & Non-Banking Financial Companies

An auditor of Ganga Finserv Ltd, an NBFC, is asked by the company's CFO to share a copy of an RBI inspection report and the Bank's audit findings with a competitor NBFC during a merger talk. The auditor notes that Section 45NB treats information obtained through audit or inspection by the Bank as confidential. Which conclusion is correct?

The auditor should not share it unless an exception applies. Under Section 45NB, such information is confidential, and the NBFC may disclose information furnished to the Bank only with the Bank's previous permission. A merger discussion or private NDA is not a listed exception.

  1. AThe auditor may share it, since it is the company's own information
  2. BDisclosure by the NBFC of information furnished to the Bank is permitted only with the Bank's previous permission, unless another exception in Section 45NB appliesCorrect
  3. CThe information may be freely disclosed once the audit report is signed
  4. DDisclosure is allowed to any person who signs a non-disclosure agreement

Explanation

Section 45NB(1) makes information in returns or obtained by the Bank through audit or inspection confidential. Section 45NB(2)(a) allows disclosure by the NBFC of information furnished to the Bank only with the Bank's previous permission. Other exceptions cover Bank publication in consolidated form and customary practice among NBFCs or disclosures required by law, none of which is shown here. An NDA is not a stated exception.

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