On April 27, 2021, the Reserve Bank of India(RBI) issued guidelines for the appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding Regional Rural Banks(RRBs)), Urban Cooperative Banks (UCBs) and Non-banking finance companies(NBFCs) (including Housing finance companies(HFCs)) from FY22 onwards.
Instructions for appointment of SCAs/SAs:
i.Procedure for Appointment of SCAs/SAs
- The banks have to appoint the SCAs/SAs for a continuous period of 3 years, satisfying the eligibility norms each year. This condition is made to protect the auditor’s/audit firms’ independence.
- Removal of the audit firms during the 3 years’ period could be done only with the prior approval of the concerned office of RBI.
ii.Prior approval – They are required to take prior approval of RBI (Department of Supervision) for appointment/reappointment of SCAs/SAs
iii.The number of SCAs/SAs:
Joint audit: The entities with asset size ofRs 15,000 crores and above as at the end of FY21, should conduct the statutory audit under joint audit of a minimum of 2 audit firms Single Audit: All the other Entities (apart from Rs 15,000 asset size entities) should appoint a minimum of 1 audit firm for conducting statutory audit.
|Asset Size of the Entity||Maximum number of SCAs/SAs|
|Up to ₹5,00,000 crore||4|
|Above ₹ 5,00,000 crore and Upto ₹ 10,00,000 crore||6|
|Above ₹ 10,00,000 crore and Upto ₹ 20,00,000 crore||8|
|Above ₹ 20,00,000 crore||12|
iv.Guidelines for UCBs and NBFCs:
- UCBs and NBFCs are allowed to adopt these guidelines from the H2 (second half) of FY22, as this is the first for them to implement such guidelines.
- Non-deposit taking NBFCs with asset size below Rs 1,000 crores are given the option to continue with their extant procedure.
Recent Related News:
On February 03, 2021, The Reserve Bank of India (RBI) issued guidelines on Risk-Based Internal Audit (RBIA) for selected Non-Banking Financial Companies (NBFCs) and Primary (Urban) Co-operative Banks (UCBs). The mentioned entities have to implement the RBIA framework by March 31, 2022.
About Reserve Bank of India(RBI):
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael DebabrataPatra, and M Rajeshwar Rao