RBI/DoS/2026-27/414 DoS.CO.ARG.8/08.91.001/2026-27 July 31, 2026

Reserve Bank of India (Commercial Banks – Statutory 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 Management
• Chapter III - Guidelines for Appointment
  • A. Number of Statutory Central Auditors / Statutory Auditors and Branch Coverage
  • B. Eligibility Criteria of Auditors
  • C. Independence of Auditors
  • D. Professional Standards
  • E. Tenure and Rotation
  • F. Audit Fees and Expenses
  • G. Appointment Procedure
  • H. Appointment of Statutory Auditors for Overseas Branch(es)
• Chapter IV – Long Form Audit Report
  • A. Procedure and Timelines
  • B. Long Form Audit Report by the Statutory Central Auditors
    • B.1 Objectives, Strategy, Scope, and Coverage
    • B.2 Indicative Coverage
  • C. Long Form Audit Report by the Statutory Branch Auditors
• Chapter V - Repeal and Other Provisions
  • A. Repeal and Saving
  • B. Application of Other Laws Not Barred
  • C. Interpretations
• Annex I
• Annex II
• Annex III
• Annex IV
• Annex V

In exercise of powers conferred by Section 30(1A) of the Banking Regulation Act, 1949, Section 10(1) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980, and Section 41(1) of the State Bank of India Act, 1955 (SBI Act), 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.

Chapter I - Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Commercial Banks – Statutory Audit) Directions, 2026.
2. These Directions shall come into effect immediately upon issuance.

B. Applicability

3. These Directions shall be applicable to the Commercial Banks (hereinafter collectively referred to as ‘banks’ and individually as a ‘bank’) in respect of appointment / reappointment of their Statutory Central Auditors (SCAs) / Statutory Auditors (SAs).

For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payment 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.

For the purpose of these Directions, the term SCAs is applicable to banks which appoint separate Statutory Branch Auditors (SBAs) whereas in all other cases, the term SAs shall be applicable.

C. Definitions

4. In these Directions, unless the context states otherwise, the terms herein shall bear the meaning assigned to them below.

(1) ‘All India Financial Institutions’ shall mean National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), National Housing Bank (NHB), Export-Import Bank of India (EXIM Bank) and National Bank for Financing Infrastructure and Development (NaBFID) as established under their respective statutes, (hereinafter collectively referred to as ‘AIFIs’). (2) ‘Audit Firm’ shall mean a partnership firm or Limited Liability Partnership (LLP). (3) ‘Central Co-operative Bank (CCB)’ shall be as defined under Sub-Section (d) of Section 2 of National Bank for Agriculture and Rural Development Act, 1981. (4) ‘Group Entities’ shall mean two or more entities related to each other through any of the following relationships, viz. Subsidiary - parent [defined in terms of Accounting Standards (AS) 21], Joint venture (defined in terms of AS 27), Associate (defined in terms of AS 23), Promoter - Promotee [as provided in the SEBI (Acquisition of Shares and Takeover) Regulations, 1997] for listed companies, a related party (defined in terms of AS 18), Common brand name, and investment in equity shares of 20 per cent and above. (5) “Large Exposure” or “LE” shall have the same meaning as defined in the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Directions, 2025. (6) ‘NBFCs [including Housing Finance Companies (HFCs)]’ shall mean such entities as defined in the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025. (7) ‘Primary (Urban) Co-operative Banks (UCB)’ shall mean entities as defined in Section 5 (ccv) read with Section 56 of the Banking Regulation Act, 1949. (8) ‘Public Sector Banks (PSBs)’ (individually as a ‘PSB’) shall refer to State Bank of India and corresponding new banks collectively. (9) ‘State Bank of India’ shall mean State Bank of India as defined in Section 5 (nc) of the Banking Regulation Act, 1949. (10) ‘State Co-operative Bank (StCB)’ shall be as defined under Sub-Section (u) of Section 2 of National Bank for Agriculture and Rural Development Act, 1981.

5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the Companies Act, 2013, or any statutory modification or re-enactment thereto or other regulations issued by RBI or the Glossary of Terms published by RBI or as used in commercial parlance, as the case may be.

Chapter II - Governance and Oversight

A. Role of the Board and Senior Management

6. The bank shall decide on the number of SCAs / SAs based on a Board [Local Management (LM) in case of foreign banks operating under branch mode in India] approved policy, inter alia, taking into account the relevant factors such as the size and spread of assets, accounting and administrative units, complexity of transactions, level of computerisation, availability of other independent audit inputs, identified risks in financial reporting and any other relevant factors.

7. The Audit Committee of the Board (ACB) / LM shall monitor and assess the independence of the auditors and conflict of interest position in terms of relevant regulatory provisions, standards, and best practices. Any concerns in this regard shall be flagged by the ACB / LM to the Board of Directors of the bank and the concerned Senior Supervisory Manager (SSM), Department of Supervision (DoS), RBI.

8. The Board / ACB / LM of the bank shall review the performance of SCAs / SAs on an annual basis. The bank shall report any serious lapses or negligence in audit responsibilities or conduct issues on part of the SCAs / SAs or any other matter considered as relevant to DoS, RBI within two months from completion of the annual audit. The bank shall send such reports with the approval / recommendation of the Board / ACB / LM, with full details of the audit firm. The Board shall review the performance of SCAs / SAs in case ACB is non-existent in the bank.

9. The Board / ACB / LM of the bank shall make recommendations to the competent authority as per the relevant statutory / regulatory instructions for fixing of audit fees of SCAs / SAs.

10. The bank shall formulate a Board / LM approved policy to be hosted on its official website / public domain and formulate necessary procedure thereunder to be followed for appointment of SCAs / SAs. Apart from conforming to all relevant statutory / regulatory requirements in addition to these instructions, this should afford necessary transparency and objectivity for most key aspects of this important assurance function.

Chapter III - Guidelines for Appointment

A. Number of Statutory Central Auditors / Statutory Auditors and Branch Coverage

11. The banks with asset size of ₹15,000 crore and above as at the end of previous year, shall ensure to get their statutory audit conducted under joint audit by a minimum of two audit firms. For the purpose of these Directions, asset size means total assets. All other banks should appoint a minimum of one audit firm for conducting statutory audit. The bank shall ensure that the joint auditors of the bank do not have any common partners and they are not under the same network of audit firms as defined in Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014. Further, the bank shall finalise the work allocation among SCAs / SAs, before the commencement of the statutory audit, in consultation with their SCAs / SAs.

12. Considering the above factors and the requirements of the bank, the Board / LM shall decide the actual number of SCAs / SAs to be appointed, subject to the following limits: