Mumbai: The Reserve Bank of India (RBI) has asked banks to state whether Price Waterhouse, the auditor for the tainted software company Satyam Computer Services Ltd, is acting as a consultant or auditor for them or any of their units in the current fiscal year.
Price Waterhouse, a unit of PricewaterhouseCoopers, one of the four big accounting firms globally, came under a cloud after Satyam founder and former chairman B. Ramalinga Raju admitted to falsifying the company’s books on 7 January.
The central bank had blacklisted Price Waterhouse in the past as well, barring it from conducting audits of banks and non-banking finance companies for three years after it found the firm guilty of professional negligence in under-providing for non-performing assets at the erstwhile Global Trust Bank Ltd. Global Trust was taken over by Oriental Bank of Commerce in 2004 after its collapse.
Seeking answers: In a questionnaire sent to banks on Friday, the Reserve Bank of India has asked lenders about their exposure to Satyam Computer Services and its related companies. Harikrishna Katragadda / Mint
Price Waterhouse is not in the list of audit firms approved by RBI as statutory central auditors for public sector banks for 2008-09.
Private and foreign banks in India can hire it as their auditor after getting the central bank’s approval.
“We have sought information from banks in the light of the recent developments (related to Satyam). After assessing the information provided, we will take further action if necessary,” said a senior RBI official, who didn’t want to be named as he is not the regulator’s official spokesperson. “The Indian banking system’s exposure to the IT (information technology) company does not seem substantial, hence there is no cause for alarm.”
Immediately after the Satyam scandal broke, the Institute of Chartered Accountants of India (Icai), the country’s premier accounting body, said it would seek an explanation from Price Waterhouse and that strict action would be taken if the auditor had been guilty of any wrongdoing.
The ministry of corporate affairs has also said that the role of the directors and auditors at Satyam would be scanned by Icai and the Institute of Company Secretaries of India.
In RBI’s questionnaire to banks on Friday, it asked them to specify if they had any relationship with Satyam or any of its group companies. The questionnaire included specific queries on banks’ exposure to Satyam and related companies.
State Bank of India, ICICI Bank Ltd, Bank of Baroda, Citibank NA, Hongkong and Shanghai Banking Corp. Ltd and HDFC Bank Ltd are among the bankers to Satyam.
Some banks admitted to a marginal exposure to Satyam. A senior Citibank official said, “Citi has an exposure of about $70 million (Rs340 crore today) to Satyam.”
ICICI Bank spokesperson Charudatta Deshpande, in an email on 7 January, had said: “ICICI Bank has no fund-based or non-fund-based exposure in Satyam Computer Services, other than a marginal exposure of about Rs3 crore on account of a forward contract.”
Deshpande added that Satyam had a current account deposit with ICICI Bank, but the “balance in this account is not material”.
Senior officials from HDFC Bank also said the bank does not have any material exposure to Satyam.