Issue of Guidelines for Appointment of Statutory Central Auditors

Last updated: 28 April 2021

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The Reserve Bank of India has issued new guidelines for the appointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) for commercial banks, Urban Co-operative Banks (UCBs), and Non-Banking Finance Companies (NBFCs). These guidelines aim to enhance the quality of financial reporting and audit quality by providing clear instructions on auditor appointment, number of auditors, eligibility, tenure, and rotation, while ensuring auditor independence. The new rules will be effective from the financial year 2021-22, with UCBs and NBFCs having the option to adopt them from the second half of FY 2021-22.

Reserve Bank of India

Date : Apr 27, 2021

Issue of Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs Reserve Bank of Indiaand NBFCs (including Housing Finance Companies)

RBI had announced in the ‘Statement on Developmental and Regulatory Policies’ issued as part of the Monetary Policy Statement dated December 4, 2020 that with a view to improve the quality of financial reporting of Supervised Entities (SEs), harmonised guidelines on appointment of Statutory Auditors of Commercial Banks (excluding RRBs), Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Finance Companies (NBFCs) will be issued.

2. Accordingly, a Circular on ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)’ has been issued today. These Guidelines provide necessary instructions for appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure and rotation, etc. while ensuring the independence of auditors. The Guidelines shall become applicable from FY 2021-22 and onwards. However, UCBs and NBFCs shall have the flexibility to adopt these guidelines from H2 of FY 2021-22 so that there is no disruption.

3. The revised Guidelines being issued will ensure that Statutory Auditors are appointed in a timely, transparent and effective manner. This is expected to improve the quality of financial reporting by the aforesaid Entities and also improve the audit quality.

(Yogesh Dayal)
Chief General Manager

Press Release: 2021-2022/115

FAQ :

The RBI has issued new guidelines for the appointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) for commercial banks (excluding RRBs), UCBs, and NBFCs (including HFCs).

The guidelines are intended to improve the quality of financial reporting and audit quality for supervised entities by providing clear instructions on the appointment of auditors.

The guidelines will be applicable from the financial year 2021-22 onwards. However, UCBs and NBFCs can adopt them from the second half of FY 2021-22.

The guidelines provide instructions on the appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure, and rotation, while ensuring auditor independence.

Commercial banks (excluding RRBs), Urban Co-operative Banks (UCBs), and Non-Banking Finance Companies (NBFCs), including Housing Finance Companies (HFCs), are covered.