Sections 45-M and 45-MA: NBFC Statements and Auditor Duties
Sections 45-M and 45-MA of the Reserve Bank of India Act, 1934 establish reporting obligations for non-banking institutions and duties of auditors. These provisions support the Reserve Bank of India (RBI) in supervising deposit-taking activities, verifying compliance and examining the financial affairs of non-banking financial companies (NBFCs).
Section 45-M: Duty to furnish statements and comply with RBI directions
Section 45-M places a direct statutory duty on every non-banking institution to provide statements, information or particulars called for by RBI, and to comply with directions issued under Chapter IIIB. This duty is not limited to an annual return: its scope depends on the particular statutory request or direction and the institution to which it applies.
The meaning of a non-banking institution is provided in Section 45-I. Reporting requests and directions may also arise under Section 45-K concerning deposits and Section 45-L concerning financial institutions.
Section 45-MA: Powers and duties of auditors
Subsection (1): Verification of deposit-related returns
The auditor must inquire whether the institution has submitted the deposit-related statements, information or particulars required by Chapter IIIB. Unless satisfied that the required information was furnished, the auditor must report to RBI, including the aggregate amount of deposits held.
Subsection (1A): RBI directions on accounts and disclosure
Where the statutory public-interest, depositor-interest or proper-assessment grounds apply, RBI may issue directions to NBFCs or their auditors about the balance sheet, profit and loss account, disclosure of liabilities and related accounting matters.
Subsection (2): Auditor reporting
Where the auditor makes or intends to make a report to RBI under subsection (1), the provision requires the auditor to include its contents in the company's statutory audit report. The supplied legislative wording refers to Section 227(2) of the Companies Act, 1956. That enactment has since been replaced for most current company-law purposes by the Companies Act, 2013, including its Section 143 on auditor powers and duties; the precise operation of the historical cross-reference should be checked against the authoritative consolidated Act and applicable savings or amendments.
Subsection (3): RBI-directed special audit
RBI may direct a special audit of an NBFC's accounts where necessary in the public interest, the company's interest or depositors' interest. Its order may specify transactions, classes of transactions or periods; RBI may appoint the auditors and require the report to be submitted to RBI.
Subsection (4): Cost of special audit
The audited NBFC must bear the auditor's remuneration fixed by RBI, taking account of the nature and volume of audit work and related expenses.
Text of Sections 45-M and 45-MA
The following retains the statutory provisions appearing in the original article, with punctuation and formatting standardized. Consult the current consolidated legislation for amendments and authoritative legal use.
Section 45-M: Statutory provision
It shall be the duty of every non-banking institution to furnish the statements, information or particulars called for, and to comply with any direction given to it, under the provisions of this Chapter.
Section 45-MA: Subsections (1), (1A), (2), (3) and (4)
(1) It shall be the duty of an auditor of a non-banking institution to inquire whether or not the non-banking institution has furnished to the bank such statements, information or particulars relating to or connected with deposits received by it, as are required to be furnished under this chapter, and the auditor shall, except where he is satisfied on such inquiry that the non-banking institution has furnished such statements, information or particulars, make a report to the bank giving the aggregate amount of such deposits held by the non-banking institution.
(1A) The bank may, on being satisfied that it is necessary so to do, in the public interest or in the interest of the depositors or for the purpose of proper assessment of the books of accounts, issue directions to any non-banking financial company or any class of non-banking financial companies or non-banking financial companies generally or to the auditors of such non-banking financial company or companies relating to balance sheet, profit and loss account, disclosure of liabilities in the books of accounts or any matter relating thereto.
(2) Where, in the case of a non-banking financial company the auditor has made, or intends to make, a report to the bank under sub-section (1), he shall include in his report under sub-section (2) of section 227 of the Companies Act, 1956 (1 of 1956), the contents of the report which he has made, or intends to make, to the bank.
(3) Where the bank is of the opinion that it is necessary so to do in the public interest or in the interest of the non-banking financial company, or in the interest of depositors of such company it may at any time by order direct that a special audit of the accounts of the non-banking financial company in relation to any such transaction or class of transactions or for such period or periods, as may be specified in the order, shall be conducted and the bank may appoint an auditor or auditors to conduct such special audit and direct the auditor or the auditors to submit the report to it.
(4) The remuneration of the auditors as may be fixed by the bank, having regard to the nature and volume of work involved in the audit and the expenses of or incidental to the audit, shall be borne by the non-banking financial company so audited.
Practical compliance considerations
- Track RBI requests: identify the applicable returns, directions, reporting format and deadlines for the institution's category.
- Reconcile deposit data: maintain records that permit verification of amounts received, outstanding liabilities and submitted returns.
- Support auditor inquiries: provide evidence of filings, responses and compliance with relevant RBI directions.
- Address audit findings: examine any reportable omissions and special-audit orders promptly; additional requirements may arise under RBI's applicable master directions and circulars.
Section 45-MA does not replace other audit duties under company law, applicable accounting standards or sector-specific RBI directions. Whether a specific obligation applies depends on the legal classification of the institution and the governing direction or notification.