New Delhi: Pulling up RBI (Reserve Bank of India) and the chartered accountant's apex body for their failure to take action against auditors of Global Trust Bank (GTB), a Parliamentary Panel has said merging weak banks with those performing well was an unhealthy practice.

Finding that RBI had observed wide variance in GTB's audits, the committee said, "This is a very serious and anomalous situation under which RBI is mainly responsible for monitoring the working of the bank but has no control to take action against the erring auditors."

"At the same time, RBI, as a strict regulator, cannot be absolved of their responsibility," the committee which tabled its report in Parliament said.

Queried on the roots of irregularities, it said that Finance Ministry had replied that RBI noticed it after March 31, 2001 and the financial health of GTB was causing concern to RBI due to wrong reporting by the bank and false certification by the statutory auditors.

The Ministry said the bank's net worth was fully eroded and both profit and capital adequacy was negative and RBI has written to Institute of Chartered Accountants of India (ICAI) to take action against the auditors.

RBI had said the statutory auditors appointed by GTB for 2001-02 and 2002-03 failed to identify non-performing assets of the bank to reflect its true picture and this resulted in false certification.

Stressing that no action seems to have been taken against the auditors by ICAI, the report said, "The Chartered Accountants Act, which is a very old and toothless legislation, should be amended."