The Reserve Bank of India (Commercial Banks – Statutory Audit) Directions, 2026 establish the regulatory framework for the appointment, eligibility, independence, tenure, and responsibilities of Statutory Central Auditors (SCAs), Statutory Auditors (SAs), and Statutory Branch Auditors (SBAs) of commercial banks. Banks must adopt a Board-approved auditor appointment policy, obtain prior RBI approval, and ensure compliance with prescribed eligibility criteria relating to audit experience, partners, professional staff, and independence. Banks with assets of ₹15,000 crore and above must appoint at least two audit firms under a joint audit, while the maximum number of auditors ranges from 4 to 12,
depending on the banks asset size. The Directions mandate a three-year audit tenure with a six-year cooling-off period, restrict conflicts of interest and non-audit assignments, and strengthen governance through oversight by the Audit Committee of the Board (ACB). A key feature is the Long Form Audit Report (LFAR), requiring auditors to evaluate critical areas such as credit risk, asset quality, investments, governance, internal controls, fraud management, KYC/AML compliance, capital adequacy, liquidity, IT and cyber security, and customer service. Overall, the Directions aim to enhance audit quality, transparency, accountability, and the reliability of financial reporting in the Indian banking sector.
