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Asks auditors to check related party transactions: RBI Governor flags ‘camouflaged’ transactions, fund diversions

Asks auditors to check related party transactions: RBI Governor flags ‘camouflaged’ transactions, fund diversions

With several instances of fund diversion and transfer of profits to “connected parties” surfacing, Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday asked auditors to identify and thoroughly scrutinise related or connected party transactions to ensure that there is no undue transfer of income or assets.

“Of late, several instances of related party transactions without following ‘arms-length’ principle and established transfer pricing mechanism have been observed,” he said.

“There have been instances of diversion of funds and/or transfer of profits to connected parties through various means – intra-group loans on favourable terms, over or under invoicing of transactions, asset transfers without fair valuation, etc,” Das said while addressing the National Academy of Audit and Accounts, Shimla.

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