Reserve Bank of India (Payments Banks – Statutory Audit) Directions, 2026
RBI notification RBI/DoS/2026-27/432 · 31 Jul 2026
RBI notification RBI/DoS/2026-27/432 · 31 Jul 2026
Summary
Check the official recordThe Reserve Bank of India issues these directions for the appointment and conduct of Statutory Central Auditors and Statutory Auditors for Payments Banks. Banks must establish a Board-approved policy for auditor selection and ensure compliance with eligibility criteria regarding partner experience and professional qualifications. Banks with an asset size of ₹15,000 crore or more must conduct joint audits with at least two audit firms. Auditors serve a three-year tenure and face a six-year cooling-off period. Banks must obtain prior RBI approval for appointments annually by July 31. The directions also define the scope of the Long Form Audit Report, which banks must submit to the RBI within 60 days of receipt from the auditor.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DoS/2026-27/432 DoS.CO.ARG.26/08.91.001/2026-27 July 31, 2026
In exercise of powers conferred by Section 30(1A) 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.
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.
(1) ‘All India Financial Institutions’ (hereinafter collectively referred to as ‘AIFIs’) 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.
(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) ‘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.
(5) ‘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.
(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.
The bank shall decide on the number of SCAs / SAs based on a Board 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.
The Audit Committee of the Board (ACB) 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 to the Board of Directors of the bank and the concerned Senior Supervisory Manager (SSM), Department of Supervision (DoS), RBI.
The Board / ACB 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, with the full details of the audit firm. Board shall review the performance of SCAs / SAs in case ACB is non-existent in the bank.
The Board / ACB 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.
The bank shall formulate a Board 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.
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 the 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.
Considering the above factors and the requirements of the bank, the Board shall decide the actual number of SCAs / SAs to be appointed, subject to the following limits: