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Dear Colleagues,

Sub: Inviting suggestions/ comments on draft LFAR of RRBs.

LFAR is a major tool to analyze the performance of banks. It not only gives a very narrow view of banking operations but also acts as an early whistle blower for the irregularities persisting in the branch/bank. Therefore, LFAR serves as an excellent audit planning tool.

Therefore, it is desirable to revise the existing LFAR for RRBs in view of all the following developments which have taken place in the functional areas of RRBs (A copy of the same is enclosed)

1.  Increased participation in investment portfolio by RRBs.
2.  increased computerization and information technology in RRBs
3.  Setting up of Audit Committee in RRBs.
4.  Introduction of Compliance function in RRBs
5.  Introduction of ALM in RRBs.
6.  Need for closure and critical examination of internal checks and control system in RRBs – System Audit, Audit in Computerized environment.
7.  Large number of pending high value fraud cases in RRBs.
8.  Introduction of disclosure norms for RRBs.
9.  Making necessary provisions for various statutory liabilities, off balance sheet exposures, unprovided for liabilities etc.
10.  Amalgamation of banks and issues involved in amalgamation process.
11.  Financial inclusion – RRB’s involvement as banking facilitators/Banking Correspondents scheme.
12.  Implementation of KYC norms and AML standards etc.

Further, to have a bird’s eve view of the state of affairs of RRBs and its branches thereof, it is proposed to have LFAR in three parts as under:

1.  Questionnaire in connection with LFAR in respect of a Branch.
2.  Annexure to the LFAR for furnishing details of Large/Irregular/Critical accounts.
3.  LFAR by the Statutory Auditors for banks as a whole.

We invite your valuable suggestions/comments on the revised LFAR so that a pragmatic and futuristic LFAR can be prepared which can go a long way to serve the banking sector.

You may send your suggestions at pdc@icai.in and for any query or clarification you may please contact CA. Anuj Goyal, Chairman, PDC at anujgoyal@icai.org ; anujgoel28@sify.com

We would be thankful if your views are furnished to us at the earliest.

Professional Development Directorate

Draft LFAR for RRBs

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