Chapter IIIB — Non-Banking Institutions and Financial Institutions
Section 45MAA: Power of Bank to take action against auditors
Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026
Section 45MAA empowers RBI to take action against an auditor who fails to comply with duties imposed by the RBI Act or RBI directions, after following the statutory process.
Operative provisionOfficial sources mappedProvision-specific decode
Finin2min - Section 45MAA in 2 minutes
Statutory structure and clause / subsection decode
This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.
Scope
Section 45MAA empowers RBI to take action against an auditor who fails to comply with duties imposed by the RBI Act or RBI directions, after following the statutory process.
Operative limb
The provision allows RBI to protect supervisory reliability by restricting or debarring an auditor from auditing specified RBI-regulated entities for the period/order contemplated by the statute.
Legal boundary
It is separate from disciplinary action by the professional institute and from company-law auditor removal, so parallel consequences may exist.
Worked practical example
Facts. If an auditor is subject to a Section 45MAA order, an NBFC should not assume a valid Companies Act appointment alone allows continuation; the RBI order's scope must also be respected.
Compliance points and common mistakes
- Do not decide the issue from the heading alone. Map the facts to the operative words of Section 45MAA and to each relevant subsection, clause, proviso or explanation shown above.
- Keep the statutory question separate from the operational overlay. It is separate from disciplinary action by the professional institute and from company-law auditor removal, so parallel consequences may exist.
- Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
- Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.
Connected provisions and instruments
Section 45MAA has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.
Questions and answers
What is the purpose of Section 45MAA?
Power of Bank to take action against auditors: Section 45MAA empowers RBI to take action against an auditor who fails to comply with duties imposed by the RBI Act or RBI directions, after following the statutory process.
Which statutory limb should be checked first?
Scope - Section 45MAA empowers RBI to take action against an auditor who fails to comply with duties imposed by the RBI Act or RBI directions, after following the statutory process.
What is the next legal boundary?
Operative limb - The provision allows RBI to protect supervisory reliability by restricting or debarring an auditor from auditing specified RBI-regulated entities for the period/order contemplated by the statute.
What record should support the conclusion?
Section 45MAA file evidence: Preserve the RBI notice, auditor response, hearing material, final order and the list/period of entities affected by any debarment.
Primary sources
- Department of Financial Services - consolidated RBI Act (states amendments through Finance Act, 2022)
- India Code - Reserve Bank of India Act, 1934
Source control for Section 45MAA: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.