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C.R. Sukumar

HYDERABAD, Sept. 12

THE Reserve Bank of India has rejected the request of Global Trust Bank (GTB), the Hyderabad-based private sector bank, for reappointment of Lovelock & Lewes, Chartered Accountants, as the statutory auditors of the bank for the financial year 2002-03.

This is for the first time in the eight years of GTB's existence that the RBI has rejected the bank's plea on the reappointment of the auditors and directed the bank to go in for new auditors.

The bank on Wednesday was asked by RBI to reduce the dividend to five per cent from 10 per cent recommended by the GTB board in July.

While the GTB management was tight-lipped over the exact reasons behind the RBI directives on changing the auditors, the promoter director of GTB, Dr Jayanta Madhab, told shareholders at the ninth annual general meeting of bank on Thursday that the RBI sought a fresh panel of auditors. Having obtained a panel of auditors from GTB, the regulator advised the bank to appoint PricewaterhouseCoopers as the auditors of the bank for the current fiscal year.

In terms of Section 31 of the Banking Regulation Act, the bank is required to obtain the approval of RBI for reappointment of auditors before placing the resolution for the shareholders' consent at the general meeting. GTB is said to have received the RBI directives for the new auditors four days prior to the AGM.

Since the bank had already circulated the AGM notice containing the resolution to reappoint Lovelock & Lewes as the auditors for the third time, it was decided at the AGM on Thursday to take up the resolution afresh proposing to appoint PricewaterhouseCoopers as the next auditors of the bank.

Keeping in view the need to issue a 14-day notice for a general meeting to adopt a resolution in terms of Sections 225 and 190 of the Companies Act, 1956, the bank has decided to adjourn the AGM on Thursday and proposed to hold an extraordinary general meeting on September 27 to seek the nod of shareholders for the appointment of new auditors.

Interestingly, a section of the shareholders at the AGM expressed concern over the bank resorting to withdrawal of reserves to the tune of Rs 252 crore towards writing off of non-performing assets and availing of the deferred tax asset facility. They sought the clarification from the management whether such practices were in tune with the accounting standards approved by the Institute of Chartered Accountants of India (ICAI).

Further, a section of the shareholders also sought the management's version on the alleged violations by the bank pertaining to the provisions of the Banking Regulation Act. The shareholders also questioned the efficiency with which the auditors of the bank were fulfilling their duties.

Allaying the apprehensions of the shareholders on the performance of auditors, the GTB Managing Director, Mr Sudhakar Gande, said: "In fact, we utilised the reserves to write off the NPAs after taking the RBI guidance on such accounting treatment. Even with regard to the objections raised by the Department of Company Affairs (DCA) on certain accounting treatments adopted by the bank, the RBI has supported us."

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