The Reserve Bank of India (RBI) on July 31, 2026, exercising powers under Section 30(1A) read with Section 56 of the Banking Regulation Act, 1949, issued the "Reserve Bank of India (Urban Co-operative Banks - Statutory Audit) Directions, 2026" with immediate effect, applicable to Urban Co-operative Banks (UCBs) for appointment/reappointment of their Statutory Central Auditors (SCAs)/Statutory Auditors (SAs). UCBs with asset size of ₹15,000 crore and above must conduct joint audits by a minimum of two audit firms without common partners, while others appoint at least one firm, with the number of auditors capped based on asset-size slabs and auditors required to cover at least the top 20 branches or 15% of gross advances.
The Directions prescribe detailed eligibility criteria for audit firms based on UCB asset size, covering minimum full-time partners, Fellow Chartered Accountant partners, CISA/ISA-qualified staff, years of audit experience, and professional staff strength, along with additional conditions such as no debarment by regulators and no conflict of interest arising from directorships. Independence safeguards prohibit concurrent auditors from being appointed SCAs/SAs, require a one-year gap between non-audit assignments and statutory audit engagements, and mandate a continuous three-year tenure with a six-year cooling-off period before reappointment; audit firms face concurrency limits across banks, NBFCs, and cooperative banks. The appointment procedure requires UCBs to obtain RBI's prior approval annually before July 31, shortlist at least two firms per vacancy, and submit eligibility certificates (Form B) and compliance certificates (Form C) as prescribed in the Annexes.
The Directions repeal all prior guidelines on Statutory Audit for UCBs (communicated via circular dated July 31, 2026) while preserving rights, liabilities, and proceedings arising under the repealed framework, and operate in addition to other applicable laws. RBI retains final authority to interpret and clarify any provision of these Directions.
[Notification No. RBI/DoS/2026-27/441, DoS.CO.ARG.35/08.91.001/2026-27]
