Banks asking borrowing customers to obtain recommendation letter from CA

Chartered Accountants Association, Surat

To,

The Esteem Member

Chartered Accountants Association Surat,

Surat

Dear Member,

Subject : Issue of Recommendation Letter to Banks for Borrowers

With reference to the above captioned subject, our association is in receipt of various complaints regarding insistence of banks asking their borrowing customers to obatin recommendation letter from CAs for the purpose of securing credit facilities. In our opinion, CAs can give such letters in their individual capacity, without involving their Professional Trade Firm Name, Membership No. and solely on their individual account to secure loans to persons known to them. For this they should not charge anything to let it take a form of professional service.

On other hand such letters should not be issued in professional capacity by charging any kind of fees, because such engagement would tantamount to work of underwriting and securing debt, which is outside the professional capacity of a Chartered Accountant Members should take utmost care and diligence while issuing such letters and any statement in aforesaid letters which has the effect of increasing the professinal or other liability, may suitably be modified prior to issuing such letters.

Thanks & Regards,
For Chartered Accountants Association, Surat

Banks asking borrowing customers to obtain recommendation letter from CA