INSUBCONTINENT EXCLUSIVE:
The plot thickens around top-notch audit firm Deloitte and its once-prized client IFIN, the company at the centre of the ILFS
Deloitte, told SFIO that the RBI circular was never referred to him or any of his team members by seniors and partners of Deloitte
The RBI master circular restricts a non-banking financial company (such as IFIN) from taking bank loans to fund activities like
inter-corporate deposits and lending to subsidiaries
bank term sheets or loan agreements take into account the conditions imposed by RBI, auditors, according to SFIO, are required to
cross-check whether a company has used bank borrowings to fund restricted businesses.
Deloitte was the sole auditor of IFIN for about a
In 2017-18, the company was jointly audited by Deloitte and BSR, an affiliate of another Big 4 firm KPMG.
Loan EvergreeningA Deloitte
spokesman declined to comment on the allegations and findings as the firm has not been served the chargesheet by SFIO.
While scanning
records in the course of the investigation, the SFIO team found a document in the email server of ILFS prepared by the Deloitte engagement
team, identifying the funding of borrowers for paying principal and interest
new loans to delinquent borrowers for servicing old borrowings
years or in a particular year (based on sample-based audit) there were a few borrower groups such as SKIL, Flemingo, Varun, Parsvnath, KVK,
Adhunik, lnd Bharat, Unitech, Kohinoor, HDIL, DB realty etc in which the above mentioned self-funding of interest was observed
These observations were discussed with seniors and partners in Deloitte and subsequently the same was discussed by them with the management
extended to different companies in accordance with the credit policy of IFIN and was within the NBFC prudential framework.
TUTORED
auditors where we used to see the audited balance sheet on year-to-year basis, we had no question of doubting the integrity of the documents
these sharp practices authorised by Ramesh Bawa, the then CEO of IFIN, were pointed out in two whistleblower letters to RBI, the IFIN audit
committee and auditors, among others
While the IFIN board had taken cognisance of the letters and appointed CA firm Khandelwal Jain Associates to report on the issues, the
scope was to verify whether procedural issues of giving loans as laid down in the policies were followed or not
was part of the group led by Ravi Parthasarathy, ex-chairman of IFIN
Emails scanned by SFIO reveal that the group concealed adverse information relating to the performance of IFIN and how they misused their
SFIO has given a clean chit to credit rating agencies as they were relying on audited reports.
