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Forensic Audit of Npas of Public Sector : Need of the Hour

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Forensic Audit of Npas of Public Sector : Need of the Hour
7/30/13

More banks opt for forensic audits - Money - DNA

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More banks opt for forensic audits
Thursday, Jul 11, 2013, 11:31 IST | Place: Mumbai | Agency: DNA

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Megha Mandavia 0
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Once bitten, twice shy. That precisely explains why banks reeling under the weight of crushing bad loans are increasingly turning to forensic audit of company balance sheets. This is to check any misuse of the loaned amount as they are turning suspicious of the rising near-bankruptcy claims. EY, formerly known as Ernst & Young, said its fraud investigation team has received at least

www.dnaindia.com/money/1859737/report-more-banks-opt-for-forensic-audits

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7/30/13

More banks opt for forensic audits - Money - DNA

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seven such requests from public sector banks in the last one year, much higher by any yardstick. The reasons are no rocket science. With the economy wobbling, bad loans are rising to alarming proportions. So, the profitability has come under strain, especially for the stateowned ones. And this is serving as a perfect alibi for promoters to divert money for their personal ends. The situation is so grim that the last fiscal saw net non-performing assets (NPAs) for public sector banks (PSBs) firming up by as much as 2% of total loan books. “There is pressure from the finance ministry to reduce net NPA to 1%. Forensic audits have increased because NPAs have gone up and are putting pressure on the balance sheet,” said an executive director with a large PSU lender. In
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