Banking Laws
Divyesh
(Querist) 02 August 2010
This query is : Resolved
Respected Experts
I am enjoying cash credit faclity of Rs. 1 lakh for my partnership firm with business turnover of Rs. 20 lakhs involved in retail trade. Recently my bank asked for audited financial statements of my firm stating that now as per RBI circular any customer whose turnover is more than Rs. 10lakh and is avialing any advances from bank needs to get accounts audited.
Where as per Income tax act My firm is not required for audit as turnover is juts Rs. 20 lakhs? Can anyone confirm the has RBI issued circular to thath effect?
Regards
Divyesh
Raj Kumar Makkad
(Expert) 02 August 2010
Though there is no need to maintain audited accounts upto a turnover of Rs. 20 lakh but if you want to avail the loan facility then it is the requirement of the bank and you should fulfill the conditions attached with the formalities of the banker. Nothing can be done in such matter for you.
Arul Kumar
(Expert) 02 August 2010
The audit requirement as per Income Tax Act is to ensure proper disclosure of affairs of the entity and payment of right amount of Taxes. Whereas the audit requirement as per bank is to ensure the compliance and to ensure the safety and security of loan or advances granted by the bank. The RBI is empowered to manage,control and monitor the functions all commercial banks in India. So this requirement is one of such regulation from RBI.
Parthasarathi Loganathan
(Expert) 02 August 2010
The purpose of calling of audited statements is to cross check the annual turnover of the firm in terms of transactions routed through the account while availing cash credit facility. It is a routine exercise in compliance with RBI guidelines wherein every account in excess of 0.50 lakhs credit facility is required to be reviewed annually.
James Arun
(Expert) 03 August 2010
Whenever you want such a confirmation whether a circular or notification has been issued by the RBI, you can ask your banker to give you the circular or circular number based on which they are making this demand. With this number, you can cross check and download that circular from the RBI website.
I agree with the comments of Shri Makkad, Shri Kumar, and Shri Loganathan.
