The Reserve Bank of India (Rural Co-operative Banks – Statutory Audit) Directions,
2026, issued on 31 July 2026, establish a comprehensive framework for the
appointment, re-appointment, independence, tenure, and oversight of Statutory
Auditors (SAs) of State Co-operative Banks (StCBs) and Central Co-operative
Banks (CCBs). Issued under the Banking Regulation Act, 1949, the Directions
require prior RBI approval for the appointment, re-appointment, or removal of
Statutory Auditors to strengthen audit quality, transparency, and governance.
The Directions require banks to adopt a Board-approved policy for appointing
auditors, prescribe eligibility and independence criteria for audit firms, mandate audit
coverage of at least 70% of total advances, and provide for one-year appointments,
renewable up to three consecutive years, followed by a six-year cooling-off period.
Banks must obtain audit firms from the NABARD-prepared eligible panel, secure RBI
approval before 31 July, and comply with the prescribed appointment procedure and
documentation.
