Last updated on: 27th November 2024

• BACKGROUND

  Si Creva Capital Services Private Limited is a private limited Company, incorporated under the provisions of the Companies Act, 2013, having Corporate Identification Number (CIN) U65923MH2015PTC266425 (“Si Creva” / “Company”). Si Creva is a Middle Layer Non- Deposit taking Non-Banking Financial Company, registered and regulated by the Reserve Bank of India (“RBI”) bearing Registration no. N-13.02129.

  The Company is in the business of providing personal and business loans via partnerships with Kissht and PayWithRing. The company also provides loan against property.

• INTRODUCTION

  Si Creva Capital Services Private Limited (“Company” or “Si Creva”) has been attaching the greatest importance to the independence and quality standards of the Statutory Audit (“SA”) function. Apart from being an essential balancing dimension in a corporate organization, it constitutes a statutory and regulatory requirement besides providing the final and omnibus assurance of corporate integrity to all internal and external stakeholders. The Company is committed to fostering and upholding the highest standards of integrity and quality in Governance and corporate reporting.

  The Policy is framed under the Reserve Bank of India’s (“RBI”) guidelines bearing Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs), as may be amended or modified, replaced, or substituted from time to time, read with the FAQs issued on June 11, 2021 (“the RBI Guidelines”) for Appointment of Statutory Auditors (SAs) of NBFCs.

• PURPOSE AND OBJECTIVE

  The objective of this Policy is to formulate and adopt a Board approved Policy for the Company pursuant to the approval and recommendation of the Audit Committee, for the appointment of Statutory Auditors (“SAs”) which would ensure transparency, objectivity, independence of the audit function, and compliance with all statutory and regulatory stipulations. Further, the Policy also aims to ensure auditor independence, prevent conflicts of interest in appointments, and enhance audit quality and standards in Si Creva Capital Services Private Limited.

  The purpose of the policy is to define the policy for appointment of SA in compliance with the extant norms of RBI and Companies Act 2013.

• APPLICABILITY

  The policy and procedure so mentioned hereunder, after approval by the Board of Directors of the Company (“Board”), shall be applicable from November 01, 2022 in respect of appointment/reappointment of SAs by the Company

• DEFINITIONS

  • “Applicable Laws” means the RBI Guidelines, Institute of Chartered Accountants of India Act, (‘ICAI Act’), 1949, Income Tax Act, 1961, the Companies Act, 2013 and the regulations issued thereunder, as amended from time to time, dealing with the qualification, eligibility, selection, appointment, tenure, or cessation of the office of SAs and/ or roles & responsibilities of such SAs.
  • “Audit Committee of Board or ACB” means the Committee duly constituted by the Board of Directors of the Company in accordance with the provisions of all applicable regulatory/statutory requirements.
  • “Board” means Board of Directors of the Company.
  • “Company” means Si Creva Capital Services Private Limited.
  • “NBFC” means a Non-Banking Financial Company registered with RBI under the provisions of RBI Act, 1934.
  • “Policy” means Policy on Appointment of Statutory Auditors.
  • “RBI” means Reserve Bank of India constituted in accordance with the provisions of the Reserve Bank of India Act, 1934.
  • “RBI Guidelines” means Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021, including guidelines, circulars or directions issued by RBI from time to time in connection with Statutory Auditors shall prevail over and above the provisions of the “Policy for Appointment of Statutory Auditors” of the Company.
  • “Group entities” shall mean two or more entities related to each other through any of the following relationships, viz. Subsidiary – parent (defined in terms of AS 21), Joint venture (defined in terms of AS 27), Associate (defined in terms of AS 23), Promoter-promotee [as provided in the SEBI (Acquisition of Shares and Takeover) Regulations, 1997] for listed companies, a related party (defined in terms of AS 18), Common brand name, and investment in equity shares of 20% and above.

• SALIENT FEATURES OF THE POLICY

  • As per RBI Guidelines:

    • The proposed Auditor should comply with the eligibility norms as prescribed under the said RBI guidelines.
    • Post appointment, the Company will inform to RBI regarding the appointment of SAs every year by way of a certificate in Form A within one month of such appointment.
    • The auditor so appointed would have a maximum tenure of three years. Upon ending of the tenure, the firm shall be eligible to be re-appointed after a period of 6 years.
    • The Company shall not assign any non-audit works (services mentioned at Section 144 of Companies Act, 2013, Internal assignments, special assignments, etc.) to the SAs for a period of at least one year, after its appointment. However, during the tenure as SA, an audit firm may provide such services to the Company which may not normally result in a conflict of interest, and Company may take decision in this regard, in consultation with the Board/ACB.
    • If an audit firm engaged with audit/non-audit works for the Group Entities (which are not regulated by RBI) is being considered by any of the RBI Regulated Entities in the Group for appointment as SCAs/SAs, it would be the responsibility of the Board/Audit Committee of the Board (“ACB”)/Local Management Committee (“LMC”) of the concerned RBI Regulated Entity to ensure that there is no conflict of interest and independence of auditors is ensured, and this should be suitably recorded in the minutes of the meetings of Board/ACB/LMC.
    • In case of removal, if any, of the Statutory Auditors before the expiry of their term and after obtaining requisite approval from ACB and Board, the Company shall inform concerned Senior Supervisory Manager (“SSM”)/Regional Office (“RO”) at RBI along with reasons/justification for the same, within a month of such a decision being taken.
    • The Board/ACB of the Company shall review the performance of SAs on an annual basis. Any serious lapses/negligence in audit responsibilities or conduct issues on part of the SAs or any other matter considered as relevant shall be reported to RBI within two months from completion of the annual audit. Such reports should be sent with the approval/recommendation of the Board/ACB, with the full details of the audit firm.
    • The Company shall obtain a certificate, along with relevant information as per Form B, from the audit firm(s) proposed to be appointed as SAs by the Company to the effect that the audit firm(s) complies with all the eligibility norms prescribed by RBI for the purpose. Such certificate should be signed by the main partner/s of the audit firm proposed for appointment of SAs of the Entities.
    • Board / ACB shall ensure that the independence of auditors is not comprised anytime.

  • As per Companies Act:

    • The audit firms duly qualified under the provisions of Section 141 of Companies Act 2013 and with no adverse remarks/disciplinary proceedings pending/initiated against the firm/any of its partners/proprietor on the records of ICAI would be considered as eligible for appointment as auditors.
    • In addition to the requirements of provisions mentioned in the Companies Act, 2013 in regard to indebtedness, any Audit firm selected for appointment would have to certify that none of the spouse, dependent children and wholly or mainly dependent parents, brothers, sisters or any of them, of any of the partners/proprietors of the firm or the firm/company in which their partners/directors are indebted to the Company.
    • The appointment so made shall be with the approval of the ACB, Board and Shareholders. The approval of shareholders will not be required for the purpose of reappointment of SA during their tenure.
    • SAs shall ensure to abide by the code of conduct for regulating, monitoring and reporting of trading by insiders and code of practices and procedures for fair disclosure of unpublished price sensitive information of the Company.

• CRITERIA TO BE CONSIDERED BEFORE APPOINTMENT OF STATUTORY AUDITORS

  The ACB shall consider the following factors before appointment of Statutory Auditors:

  • Provisions of the RBI Guidelines.
  • Eligibility criteria of the SAs as prescribed by RBI from time to time based on the asset size of the NBFC.
  • Qualification as an auditor as per Section 141 of the Companies Act, 2013.
  • The audit firm should not be under debarment by any Government Agency, National Financial Reporting Authority (NFRA), the Institute of Chartered Accountants of India (ICAI), RBI or Other Financial Regulators.
  • The appointment of SAs should be in line with the ICAI’s Code of Ethics/ any other such standards adopted and should not give rise to any conflict of interest.
  • Written consent of the auditor to such appointment and certificate that the appointment, if made, shall be in accordance with the conditions stipulated under the RBI Guidelines and other statutory provisions.
  • The prescribed limit on minimum and maximum number of joint auditors based on asset size of the NBFC and other prescribed factors from time to time including in terms of the RBI Guidelines.
  • Limit on NBFC audits by SAs as prescribed by RBI from time to time.

  • The time gap between any non-audit works (services mentioned at Section 144 of Companies Act, 2013, Internal assignments, special assignments, etc.) by the SAs for the NBFC or any audit/non-audit works for its RBI Regulated Entities in the Group should be at least one year, before or after its appointment as SAs. The look back stipulation of one year shall be applicable from FY 2022-23. During the tenure as SA, an audit firm may provide such services to the NBFC which may not normally result in a conflict of interest, and the NBFC shall decide in this regard, in consultation and approval of the ACB. (A conflict would not normally be created inter alia in the case of the following special assignments (indicative list):

    • Tax audit, tax representation and advice on taxation maters.
    • Audit of interim financial statements.
    • Certificates required to be issued by the statutory auditor in compliance with statutory or regulatory requirements.
    • reporting on financial information or segments thereof).
    • Concurrent auditors of the NBFC should not be considered for appointment as SAs.
    • The restrictions would also apply to an audit firm under the same network of audit firms or any other audit firm having common partners.
    • Any restrictions due to the directorship of a partner of an audit firm in the group entity of the NBFC as defined under these guidelines.
    • Any other applicable regulations for the NBFC from time to time.
  • If an audit firm engaged with audit/non-audit works for the Group Entities (which are not regulated by RBI) is being considered by any of the RBI Regulated Entities in the Group for appointment as SCAs/SAs, it would be the responsibility of the Board/ACB/LMC of the concerned RBI Regulated Entity to ensure that there is no conflict of interest and independence of auditors is ensured, and this should be suitably recorded in the minutes of the meetings of Board/ACB/LMC.

• NUMBER OF STATUTORY AUDITORS

  Pursuant to the applicable provisions of the RBI Guidelines, the asset size being less than INR 15,000 Crore, the Company shall appoint one (01) audit firm for conducting statutory audit of the Company.

  The Company shall comply with RBI Guidelines and appoint such number of SA as may be required pursuant to increase in the asset size or other factors introduced under applicable laws, from time to time, for the number of SA required to be appointed.

  The number of SAs to be appointed for a financial year shall be decided, inter alia, considering the relevant factors such as the size and spread of assets, accounting and administrative units, complexity of transactions, level of computerization, availability of other independent audit inputs, identified risks in financial reporting, etc. Since, the asset size of the Company is below ₹ 5,00,000 crore, the maximum number of SAs to be appointed by the Company shall not exceed four (04) as may be decided by Board or Audit Committee in terms of RBI Guidelines.

• ELIGIBILITY CRITERIA FOR STATUTORY AUDITORS

  One audit firm can concurrently take up statutory audit of a maximum of four Commercial Banks [including not more than one PSB or one All India Financial Institution (NABARD, SIDBI, NHB, EXIM Bank) or RBI], eight UCBs and eight NBFCs during a particular year, subject to compliance with required eligibility criteria and other conditions for each entity and within overall ceiling prescribed by any other statutes or rules.

  The asset size of the Company is more than Rs. 1000 crore but less than Rs. 15,000 crore. Hence, as per the RBI Guidelines, the Audit Firm considered for appointment as a SAs of the Company, shall fulfil the following eligibility criteria at the time of their appointment and on continuous basis.

  • Organisation, size and capacity considerations:

    Asset size as on 31st March of previous year	Minimum No. of Full time Partners (FTP) associated with the firm for a period of at least 3 years (Note 1)	Out of total FTPs, Minimum No. of Fellow Chartered Accountants (FCA) Partners associated with the firm for a period of at least 3 years	Minimum Number of Full time Partners/ Paid CAs with CISA/ ISA Qualification (Note 2)	Minimum Number of years of Audit experience of the firm (Note 3)	Minimum Number of Professional staff (Note 4)
    Above ₹ 1,000 crore and Up to ₹15,000 crore	3	2	1	8	12

    Notes:

    • There should be at least one-year continuous association of partners with the firm as on the date of shortlisting for considering them as full-time partners. Further, at least two partners of the firm shall have continuous association with the firm for at least 10 years.

      The full-time partner’s association with the firm would mean ‘exclusive association. The definition of exclusive association’ will be based on the following criteria:

      • The full-time partner should not be a partner in other firm/s;
      • She/ He should not be employed full time / part time elsewhere;
      • She/ He should not be practicing in her/his own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949;
      • The income of the partner from the firm/ LLP should be adequate, as per the Board/ ACB’s assessment, for considering them as full-time exclusively associated partners, which will ensure the capability of the firm for the purpose.
    • There should be at least one-year continuous association of Paid CAs with CISA/ISA qualification with the firm as on the date of shortlisting for considering them as Paid CAs with CISA/ISA qualification for the purpose.
    • Audit experience shall mean experience of the audit firm as Statutory Central Auditor/Branch Auditor of Commercial Banks (excluding RRBs)/ UCBs/NBFCs/ AIFIs. In case of merger and demerger of audit firms, merger effect will be given after 2 years of merger while demerger will be effected immediately for this purpose.
    • Professional staff includes audit and article clerks with knowledge of book-keeping and accountancy and who are engaged in on-site audits but excludes typists/stenos/computer operators/ secretaries/subordinate staff, etc. There should be at least one-year continuous association of professional staff with the firm as on the date of shortlisting for considering them as professional staff for the purpose.

  • Additional considerations:

    • The audit firm proposed to be appointed as SA for the Company shall be duly qualified for appointment as auditor of a company in terms of Section 141 of the Companies Act, 2013.
    • The audit firm should not be under debarment by any Government Agency, National Financial Reporting Authority (NFRA), the Institute of Chartered Accountants of India (ICAI), RBI or Other Financial Regulators.
    • The appointment of SCAs/SAs will be in line with the ICAI’s Code of Ethics/any other such standards adopted and does not give rise to any conflict of interest.
    • However, if an Audit Firm is being considered for appointment as SAs, whose partner is a Director in any of the Group Entities (which are not regulated by RBI), the said Audit Firm shall make appropriate disclosures to the ACB as well as to the Board.
    • The Audit firm should have the capability and experience in deploying Computer Assisted Audit Tools and Techniques (CAATTs) and Generalized Audit Software (GAS), commensurate with the degree and complexity of the computer environment of the Company in order to achieve audit objectives.

  • Continued Compliance with basic eligibility norms

    In case any audit firm (after appointment) does not comply with any of the eligibility norms (on account of resignation, death etc. of any of the partners, employees, action by Government Agencies, NFRA, ICAI, RBI, other Financial Regulators, etc.), it shall promptly approach the Company with full details. Further, the audit firm shall take all necessary steps to become eligible within a reasonable time and in any case, the audit firm should be complying with the above norms before commencement of Annual Statutory Audit for Financial Year ending 31st March and till the completion of annual audit.

    In case of any extraordinary circumstance after the commencement of audit, like death of one or more partners, employees, etc., which makes the firm ineligible with respect to any of the eligibility norms, the Company shall make an application to RBI along with relevant documents forwarded by the Auditor to allow the concerned audit firm to complete the audit, as a special case.

• INDEPENDENCE CRITERIA FOR STATUTORY AUDITORS AND ISSUES OF CONFLICT OF INTEREST

  • The Board after the recommendation of the Audit Committee of the Board, will assess, at the time of appointment and every year thereafter, the eligibility and independence of the auditors and any conflict of interest in terms of relevant regulatory provisions, standards, and prevalent best practices. Any concerns are to be flagged by the Board of the Company and to the Senior Supervisory Manager (SSM)/ Regional office of RBI.
  • In case of any concern with the Management of the Entity such as non-availability of information/non-cooperation by the Management, which may hamper the audit process, the SA shall approach the Board/ACB/LMC of the Entity, under intimation to the concerned SSM/Regional Office of RBI.
  • No non-audit assignment as mentioned in section 144 of the Companies Act, 2013, which may create a conflict of interest, should be awarded to SAs during the course of their tenure as SAs.
  • The time gap between any non-audit works (services mentioned in Section 144 of the Companies Act, 2013, Internal assignments, special assignments, etc.) by the SAs for the Company or any audit/non-audit works for its group companies (RBI-regulated entities) should be at least one year, before or after its appointment as SAs. However, during the tenure as SA, an audit firm may provide such services to the concerned Entities which may not normally result in a conflict of interest, and Entities may take their own decision in this regard, in consultation with the Board and Audit Committee of the Board.
  • Concurrent auditors of the Entity should not be appointed as SAs for the same entity. Furthermore, in evaluating the auditor’s independence, it is essential to consider the audits of both the Entity and any entities with considerable exposure to it for the same reference year.
  • The restrictions in point d and e above, will also apply to an audit firm under the same network of audit firms or any other audit firm having common partners. As per Rule 6(3) of the Company (Audit and Auditors) Rules, 2014, the term “same network” includes the firms operating or functioning, hitherto or in future, under the same brand name, trade name or common control.

• ADHERENCE TO PROFESSIONAL STANDARDS BY AUDITORS

  • The SAs shall be strictly guided by the relevant professional standards in the discharge of their responsibilities with the highest diligence. Any negligence is to be reported by the Board to RBI after a yearly assessment.
  • Any significant lapses, negligence in audit duties, or relevant conduct issues by SCAs/SAs must be reported to the RBI within two months of completing the annual audit. These reports should include the audit firm’s full details and require approval or recommendation from the Board/ACB/LMC.
  • If there are lapses in audit assignments that lead to misstatements in an Entity’s financial statements, or violations of RBI guidelines regarding the SCAs/SAs roles and responsibilities, the SCAs/SAs would be liable to be dealt with suitably under the relevant statutory/regulatory framework.

• TENURE AND ROTATION POLICY

  • An Audit firm can continue to be appointed as SA for a period of three years subject to the firm satisfying the eligibility criteria for each year. The same audit firm cannot be reappointed in the same Entity for six years (two tenures) after completion of full or part of one term of the audit tenure. However, audit firms can continue to undertake statutory audit of other Entities.
  • In the event of the Company needing to remove the SAs before the completion of three years tenure, the Company shall inform concerned SSM/Central Office of RBI, Department of Supervision (NBFCs) about it, along with reasons/justification for the same, within a month of such a decision being taken.
  • A group of audit firms having common partners and/or under the same network, will be considered as one entity and they will be considered for allotment of SA accordingly. Shared/Sub-contracted audit by any other/associate audit firm under the same network of audit firms is not permissible. The incoming audit firm shall not be eligible if such audit firm is associated with the outgoing auditor or audit firm under the same network of audit firms.
  • The audit fees for the Statutory Auditor shall be reasonable and commensurate with the scope and coverage of the audit.

• REMUNERATION AND EXPENSES

  • Section 142 of the Companies Act prescribes that the remuneration of the auditor of a Company shall be fixed in its general meeting or in such manner as may be determined by the Board and Audit Committee of the Board in consultation with the statutory auditor.
  • Remuneration of Auditor includes the expenses, if any, incurred by the auditor in connection with the audit of the Company and any facility extended to him
  • Remuneration of the Auditor does not include any remuneration paid to him for any other services (mentioned in section 144 of the Companies Act) rendered by him at the request of the company.
  • The audit fees for the Statutory Auditor shall be reasonable and commensurate with the scope and coverage of the audit, size and spread of assets, accounting and administrative units, complexity of transactions, level of computerization, identified risks in financial reporting, etc.

  • The Company shall disclose by way of notes, additional information regarding the aggregate expenditure of the following items:-

    Payments to the auditor as

    • Auditor
    • For Taxation matters
    • For Company law matters
    • For other services
    • For Reimbursement of expenses

• PROCEDURE FOR APPOINTMENT AND REAPPOINTMENT OF STATUTORY AUDITORS

  • The Board and Audit Committee of the Board shall take into account the relevant factors such as size and spread of assets, accounting and administrative units, complexity of transactions, level of computerization, availability of other independent audit inputs, identified risks in financial reporting, etc. for shortlisting the eligible audit firms.
  • The Company shall place the name of shortlisted audit firms, in order of preference, before the Board and Audit Committee of the Board and the Board and Audit Committee of the Board shall shortlist and recommend a minimum of 2 (two) audit firms for every vacancy for selection of SAs so that even if the firm at first preference is found to be ineligible/refuses appointment, the firm at second preference can be appointed and the process of appointment of SAs does not get delayed.
  • In case of reappointment of SAs till completion of tenure of continuous term of 3 years, there would not be any requirement of shortlisting multiple audit firms for appointment. The appointment of Statutory Auditors shall be in conformity with the standards laid down in the RBI Directions and other applicable laws.
  • The Company shall obtain an eligibility criteria certificate, duly signed and authenticated by the main partner/s of the audit firm who are proposed to be appointed as SA, to the effect that each audit firm complies with all the eligibility norms prescribed by RBI as prescribed in Form B of the guidelines (Annexure 2) and also a confirmation that the audit firm adheres to the prescribed limit of conducting a statutory audit of only a maximum number (as prescribed by RBI) of NBFCs during a particular year, including the Company’s audit.
  • While the overall onus of the audit firm fulfilling eligibility criteria as prescribed by RBI in Annex I or as may be amended from time to time, for audit of the Company as per RBI guidelines rests with the audit firm, the Company shall also verify, through reasonable means, their compliance with the eligibility norms, prescribed by RBI.
  • Upon appointment of SAs, the Company shall inform RBI every year, in prescribed FORM A (Annexure 1), of appointment / confirming eligibility of SAs within such timeframe as may be prescribed.
  • In the event of any extraordinary circumstance after the commencement of the audit, like the death of one or more partners, employees, etc., which makes the firm ineligible with respect to any of the eligibility norms, the Company will promptly seek the approval of the RBI to allow the concerned audit firm to complete the audit, as a special case. In such an event, the Company, subject to the approval of its Board, may also consider the substitution of the Audit firm with another Audit firm that fulfills all eligibility criteria and report the same to the Reserve Bank with justification.

• REVIEW OF PERFORMANCE OF STATUTORY AUDITORS BY THE BOARD

  • The SAs shall be strictly guided by the relevant professional standards in discharge of their audit responsibilities with highest diligence.
  • The Board and Audit Committee of the Board of the Company shall review the performance of SA on an annual basis. The Statutory Auditors continuing to fulfill the eligibility criteria and have not been assessed as negligent will be eligible for continuance subject to policy regarding tenure and rotation.
  • Any serious lapses/negligence in Audit responsibilities or conduct of issues on part of the SAs or any other matter considered relevant shall be reported to RBI within two months from the completion of the annual audit.
  • In concurrence of above, every year the Board should meet and review the performance of the SAs and give requisite approval, if required, for reporting any serious lapses by SAs to RBI, within the required timeframe which is two months from completion of the audit containing the full details of the audit firm.

• REGULATORY REPORTING

  The Company will inform RBI about the appointment of SAs, by way of a certificate in Form A (Annexure 1) as prescribed by RBI, within one month of such appointment and the Board to assess the eligibility of the SA on a yearly basis and to submit a certificate in FORM A to this effect to the RBI within 30 days of the Annual General Meeting of the Company.

• DISCLOSURE / TRANSPARENCY

  This policy shall be hosted on the website of the Company and that the appointment(s) made shall be disclosed to concerned authorities as per relevant regulatory / statutory provisions.

• CONFLICT IN POLICY

  In the event of a conflict between this Policy and the extant regulations or laws (as may be amended, replaced, restated, from time to time), the regulations and laws shall prevail.

• REVIEW OF THE POLICY

  The Policy will be reviewed as and when any changes are to be incorporated in the Policy due to change in applicable law or regulation or at yearly intervals or as and when considered necessary by the Board of Directors of the Company.

• OMNIBUS CLAUSE

  All extant & future master circular/directions/guidance/guidance notes issued by RBI from time to time would be the directing force and will super cede the contents of this policy.

For Si Creva Capital Services Private Limited