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RBI on 27.04.2021 vide notification RBI/2021-22/25 Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 has issued guidelines for appointment of Statutory Central Auditors (SCA)/ Statutory Auditor (SA) of commercial banks (excluding RRB), Urban cooperative banks (UCBs) and Non-Banking Financial Companies(NBFCs) including Housing Finance Companies. Notification clarifies applicability, approval, number of auditors (i.e. maximum and minimum), eligibility, independence, tenure and rotation of SCA/SA.

I. Applicability of notification


  • Non deposit taking NBFC having assets size below Rs. 1,000 crore may follow earlier policy.

II. RBI’s Prior approval of RBI is required for appointing SCAs/SAs as follows :-

  • Commercial Banks (excluding RRB) and UCBs – before 31st July of reference year.
  • Public Sector Bank – approach RBI within 1 month of receipt of list of eligible audit firms.
  • NBFC – don’t need approval rather they need to inform RBI within one month of appointment.
RBI set parameters for appointing Bank Auditor for FY 2021-22 and onwards

III. Number of SCAs/SAs

Asset Size

  • Joint auditors should not have common partners and they are not under same network of audit firms.
  • Aside Board/Local Management Committee (LMC) may increase no. of SCA/SA depending upon asset size of entity. Following are limits for appointment of maximum no. of SCAs/SAs
  • PSB shall allot Top 20 branches to SCAs as to cover a minimum of 15% of total gross advances.
  • For other entities SCAs/SAs shall visit and audit at least Top 20 branches or Top 20% branches so as to cover a minimum of 15% of total gross advances.

IV. Eligibility criteria of Auditors

Basic Eligibility

Asset Size of Entity as on 31st March of Previous Year

Minimum No. of Full-Time partners (FTPs) associated with the firm for a period of at least three (3) years

Out of total FTPs, Minimum No. of Fellow Chartered Accountant (FCA) Partners associated with the firm for a period of at least three (3) years

Minimum No. of Full Time Partners/ Paid CAs with CISA/ISA Qualification

Minimum No. of years of Audit Experience of the firm

Minimum No. of Professional staff

Note 1

Note 2

Note 3

Note 4

Above Rs 15,000 crore






Above Rs 1,000 crore and Up to Rs 15,000 crore






Upto Rs 1,000 crore






* Not mandatory for UCBs/NBFCs with asset size of upto Rs 1,000 crore.

(* Notes are attached for detail reference)


V. Independence of Auditors

  • For Commercial Banks (exclu. RRB) and NBFC – Audit Committee/LMC shall monitor and access independence of auditor.
  • For UCB/remaining NBFC - Board shall monitor and access independence of auditor.
  • Any concern regarding independence shall be reported to RBI.
  • Any concern with management of the entity regarding non availability of information or non-cooperation shall be intimated to RBI.
  • Concurrent auditor of Entity shall be ineligible to appoint as SCA/SA of same entity.
  • Time gap between non audit work and acceptance of audit should be of one year.

VI. Professional Standard

  • SCA/SA should follow relevant professional standard.
  • Board/Audit committee/LMC of entity shall annually review performance of SCA/SA. Any lapses in audit responsibilities by SCA/SA shall be reported within 2 months of completion of annual audit.

VII. Tenure and Rotation

  • SCA/SA shall be appointed for continuous period of 3 years unless they not satisfy any eligibility criteria.
  • Cooling period of 6 years applied after completing one term of 3 year (in full or part)
  • One audit firm can take statutory audit of maximum 4 commercial bank (including not more than 1 PSB)
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Attached File : 2286454_44591_notes.pdf

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Category Audit, Other Articles by - Manish Mehra