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Several chartered accountants (CAs) in India are being probed by the Institute of Chartered Accountants of India (ICAI) for their alleged role in aiding Chinese loan apps. They are accused of not conducting due diligence before signing several statutory documents for these apps, a report by Economic Times (ET) said.
In some instances, the loan apps have provided fake addresses in the incorporation forms, and the CAs did not verify them before signing the documents.
"The purview of investigation is to ascertain if there was any professional misconduct on the part of the chartered accountants. Further, the probe will also look into whether these professionals have signed or authored any false documents supplied by such shell companies," Debashis Mitra, president of ICAI, was quoted as saying by ET.
In India, if a company wants to become a lending business, they need to get a license from the Reserve Bank of India (RBI). These companies are then designated as non-banking financial corporations (NBFCs).
The Enforcement Directorate (ED) had earlier initiated a probe into several shell companies acting as a front for these Chinese apps.
"The process is far more stringent for foreign entities. Also, there are certain limitations on investments from China," a person aware of the matter said.
According to the report, Mitra added that ICAI had received references from the government regarding the role of CAs in facilitating these apps since January.
Apart from CAs, company secretaries (CS) and other professionals are also being probed.
There is no legal restriction on any Chinese company conducting business in India. They are, however, required to get security clearances from the Home Ministry.
