RBI master-direction · 31 Jul 2026
RBI/DoS/2026-27/409 DoS.CO.ARG.3/08.91.021/2026-27 July 31, 2026 Reserve Bank of India (Commercial Banks – Concurrent Audit) Directions, 2026 Table of Contents Chapter I - Preliminary A. Short Title and Commencement B. Applicability C. Definitions Chapter II - Governance and Oversight A. Role of the Board and Senior Ma…
RBI/DoS/2026-27/409
DoS.CO.ARG.3/08.91.021/2026-27
July 31, 2026
Table of Contents
Chapter I - Preliminary
A. Short Title and Commencement
B. Applicability
C. Definitions
Chapter II - Governance and Oversight
A. Role of the Board and Senior Management
Chapter III - Guidelines for Concurrent Audit
A. Coverage
B. Appointment of Concurrent Auditors
C. Accountability
D. Tenure
E. Remuneration
F. Reporting System
Chapter IV - Repeal and Other Provisions
A. Repeal and Saving
B. Application of Other Laws Not barred
C. Interpretations
Concurrent audit aims at shortening the interval between a transaction and its independent examination. It is, therefore, integral to the establishment of sound internal accounting functions and effective controls and is regarded as part of a bank's early warning system to ensure timely detection of serious errors and irregularities, which also helps in averting fraudulent transactions and preventive vigilance in the bank.
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Commercial Banks – Concurrent Audit) Directions, 2026.
These Directions shall come into effect immediately upon issuance.
For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payments Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949.
The detailed scope of the concurrent audit shall be determined and approved by the Audit Committee of the Board (ACB) / Local Management (LM) in case of foreign banks.
ACB / LM of the bank shall decide (i) the maximum tenure of external concurrent auditors, and (ii) remuneration to be paid to external concurrent auditors.
ACB / LM of the bank shall review the effectiveness of the Concurrent Audit System as well as the performance of the concurrent auditors on an annual basis and take necessary measures to suitably strengthen the system.
The Head of Internal Audit (HIA) at its discretion, with the prior approval of the ACB or the LM, shall determine the scope of work to be entrusted to concurrent auditors, including the coverage of business activities and branches.
The bank shall, however, ensure that risk sensitive areas identified by it as per its specific business models are covered under concurrent audit. The broad areas of coverage under concurrent audit shall be based on the identified risk of the unit and must include random transaction testing of sufficiently large sample of such transactions wherever required.
The bank shall ensure that the concurrent audit, at minimum, covers the following areas, as applicable:
The bank shall formulate a Board approved policy specifying whether concurrent audit shall be conducted through its own staff or through external auditors, including retired staff of its own bank, as considered appropriate.
The HIA in the bank shall participate in selection of concurrent auditors where such function is outsourced and shall be responsible for the quality review (including skills of the staff employed) of the work of the concurrent auditors reporting to them. It shall, however, be ensured that if any partner of a Chartered Accountant firm is a Director on the Board of a bank, no partner of the same firm shall be appointed as concurrent auditor in the same bank.
Where the bank has engaged its own officials as concurrent auditors, it shall ensure that such officials are experienced, well trained, and sufficiently senior. The staff engaged in concurrent audit must be independent of the branch / business unit, where concurrent audit is conducted.
Where the bank appoints an external audit firm as a concurrent auditor and identifies any serious acts of omission or commission in the discharge of its responsibilities, the bank shall provide the audit firm a reasonable opportunity of being heard before taking any adverse action; cancel the appointment of the audit firm, where such omission or commission is established, and report the matter to ACB / LM of the bank, RBI and Institute of Chartered Accountants of India (ICAI).
The bank shall put in place a policy for fixing accountability in cases of serious acts of omission or commission noticed in the working of bank's own staff or retired staff, working as concurrent auditors.
