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

During the audit of Arya Housing Finance NBFC, the auditor learns that the RBI has obtained certain information through inspection of the company. A journalist asks the auditor to share it, and a shareholder claims that the Bank can be compelled by a tribunal to produce the inspection material. Based on Section 45NB, which conclusion is correct?

Information obtained by the RBI through audit or inspection, and that in returns, is confidential. Section 45NB(4) prevents any court, tribunal or authority from compelling the Bank to produce it. The auditor should therefore not share it with the journalist, and the shareholder's claim fails.

  1. AInformation obtained through audit or inspection by the Bank is to be treated as confidential, and no court, tribunal or authority can compel the Bank to produce or give inspection of material obtained under the ChapterCorrect
  2. BSuch information becomes public once an inspection ends, and a tribunal can always compel production
  3. CConfidentiality applies only to returns filed by the NBFC, not to information obtained through inspection
  4. DThe NBFC may freely disclose any information furnished to the Bank without RBI permission

Explanation

Section 45NB(1) treats information contained in statements or returns and information obtained through audit or inspection by the Bank as confidential, subject to the exceptions. Section 45NB(4) bars any court, tribunal or authority from compelling the Bank to produce or give inspection of such material. Disclosure by the NBFC of information furnished to the Bank needs the Bank's previous permission under 45NB(2)(a), so the other options are wrong.

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