The RBI has debarred the chartered accountancy firm of Haribhakti & Co from undertaking any audit assignments in any entity regulated by the central bank for two years over lapses in the audit of Srei Group. This is the first debarment under section 45MAA of the Reserve Bank of India Act, 1934. This section was introduced in August 2019 following an amendment of the Act, which gives the RBI powers to remove directors of an NBFC and supersede the board and also remove or debar auditors for a period of up to three years.Shailesh Haribhakti on Tuesday said he ceased to be a partner of Haribhakti & Co LLP with effect from March 31, 2018. “I am not responsible for any activities or actions, whatsoever, by the same company. Any references to me in connection with Haribhakti & Co or Haribhakti & Co LLP (as these names are used interchangeably) may be inappropriate,” he said in a statement.The RBI said in a press release, “This action has been taken on account of the failure on the part of the audit firm to comply with a specific direction issued by the RBI with respect to its statutory audit of a systemically important non-banking financial company. The central bank has clarified that the two-year ban starts from April 1, 2022, and will not impact ongoing audit assignments in regulated entities for the current financial year that ends on March 31, 2022.Although the RBI did not name Srei in its press release, officials confirmed that the debarment related to the audit of the Kolkata-based financial services group. According to the annual report of Srei Infrastructure, Haribhakti & Co were statutory auditors for the company between financial years 2016 and 2020. The action comes a week after the RBI superseded the boards of Srei Infrastructure Finance and Srei Equipment Finance, and initiated bankruptcy proceedings against them.The central bank has taken a tough stance against the auditing industry following a series of high-profile failures including IL&FS, DHFL and Yes Bank. Earlier this year, the RBI issued new auditing rules requiring banks and financial companies to change auditors every three years as against four years earlier.