Price Waterhouse barring: RBI plea on HC stay soon

The Reserve Bank of India (RBI) will file its affidavit in response to the Calcutta High Court stay on its order banning Price Waterhouse & Co from auditing work in the coming week.

In reply to the same, the audit firm will file its response subsequently.

In October last, Price Waterhouse was struck off from the audit panel of banks and finance companies following a directive issued by the central bank that no institution should appoint either Price Waterhouse or Lovelock & Lewes as auditors.

This was a fallout of the scandal surrounding Global Trust Bank. This is despite Price Waterhouse having qualified the accounts of the private sector bank, and the RBI had equally come out with its inspection report.

But the high court's order giving reprieve to the audit firm dated May 2 has come six months too late. Price Waterhouse would need to wait December-January when banks appoint audit firms, said company officials.

"Audit appointments usually happen by December-January," they stated.

At the same time Price Waterhouse officials stated that RBI's diktat has not dealt the audit firm a bodyblow, considering that the banking regulator allows firms to take on at most four banks' audits. "But it will take us six months to get re-appointed," stated company officials.

The Calcutta High Court has reprimanded the RBI "from issuing any further instruction to any commercial bank or financial institution advising them not to engage the petitioner-firm in the audit work until further orders."

Despite repeated meetings with the RBI, Price Waterhouse was not able to convince the regulator to change its stance, forcing the audit firm to take the RBI to court.