The Reserve Bank of India (RBI) on July 31, 2026, issued the Reserve Bank of India (Small Finance Banks – Statutory Audit) Directions, 2026.
The following has been stated: -
•The Reserve Bank of India (RBI) issued the Reserve Bank of India (Small Finance Banks – Statutory Audit) Directions, 2026 to establish regulatory guidelines for the appointment and reappointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) in Small Finance Banks.
•Effective immediately, the policy mandates that banks with an asset size of ₹15,000 crore and above conduct joint audits using a minimum of two audit firms, while smaller banks require at least one firm.
•The Directions outline minimum eligibility criteria based on asset size, including the required number of full-time partners, Fellow Chartered Accountants, CISA/ISA qualified staff, and prior audit experience.
•To protect independence, auditors are appointed for a continuous three-year term, subject to annual eligibility, followed by a mandatory six-year cooling-off period before reappointment in the same bank.
•Additionally, the Board and Audit Committee of the Board (ACB) are entrusted with governance oversight, requiring them to monitor auditor independence, evaluate annual performance, and ensure transparency through a publicly hosted board-approved policy.
These Directions shall come into effect immediately upon issuance.
The detailed directions are given in the document below.
[Notification No.: RBI/DoS/2026-27/423 DoS.CO.ARG.17/08.91.001/2026-27]
