RBI norms for appointment of auditors of banks, NBFCs

Mumbai, April 27

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The RBI on Tuesday issued guidelines for appointment of statutory auditors of banks and non-banking finance companies (NBFCs), including housing finance companies.

New guidelines

• Guidelines for appointment of statutory central auditors of commercial banks, UCBs and NBFCs will be applicable for FY 2021-22 and onwards
• However, non-deposit taking NBFCs with asset size below Rs1,000 crore have the option to continue with their extant procedure

‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)’ will be applicable for financial year 2021-22 and onwards.

However, non-deposit taking NBFCs with asset size below Rs 1,000 crore have the option to continue with their extant procedure.

The guidelines provide necessary instructions for appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure and rotation, etc. while ensuring the independence of auditors, the Reserve Bank said.

As the guidelines are being implemented for the first time for Urban Co-operative Banks (UCBs) and NBFCs from 2021-22, “they shall have the flexibility to adopt these guidelines from the second half of FY 2021-22, in order to ensure that there is no disruption”.

Banks and UCBs will be required to take prior approval of RBI for appointment/reappointment of SCAs/SAs, on an annual basis, the guidelines said.

For entities with an asset size of Rs 15,000 crore and above as at the end of previous year, statutory audit should be conducted under joint audit of a minimum of two audit firms. All other entities should appoint a minimum of one audit firm for conducting statutory audit. — PTI