The Reserve Bank of India (RBI) on July 31, 2026, issued the Reserve Bank of India (Small Finance Banks – Concurrent Audit) Directions, 2026.
The following has been stated: -
•Reserve Bank of India under Section 35A of the Banking Regulation Act, 1949, issued these Directions to establish a standardized framework for concurrent audits across all Small Finance Banks.
•The primary objective of the framework is to strengthen internal accounting, enhance preventive vigilance, and enable early detection of operational irregularities and fraudulent transactions.
•Under the rules, the Audit Committee of the Board retains ultimate oversight, approving the audit scope, remuneration, and performance reviews.
•Banks may utilize internal staff, eligible retired employees under 70 years old, or external CA firms subject to a maximum continuous tenure of five years overall and three years per branch.
•Mandatory audit coverage encompasses key risk areas such as cash, loans, KYC/AML compliance, treasury operations, and centralized processing centers, with findings submitted quarterly to the audit committee.
These Directions shall come into effect immediately upon issuance.
The detailed directions are given in the document below.
[Notification No.: RBI/DoS/2026-27/418 DoS.CO.ARG.12/08.91.021/2026-27]
