The Reserve Bank of India (Small Finance Banks – Concurrent Audit) Directions, 2026 establish a comprehensive framework for strengthening the concurrent audit system in Small Finance Banks. The Directions require banks to implement a robust, risk-based concurrent audit mechanism to ensure timely detection of errors, irregularities, compliance breaches, and fraudulent transactions through continuous independent examination of banking operations. The Directions prescribe the governance framework for concurrent audit, including the roles of the Audit Committee of the Board (ACB), senior management, and the Head of Internal Audit (HIA). They require banks to adopt a Board-approved policy governing the appointment, tenure, remuneration, accountability, reporting, and performance review of concurrent auditors. The framework also specifies the minimum scope of concurrent audit,
covering key risk areas such as loans and advances, KYC/AML compliance, treasury operations, foreign exchange transactions, clearing operations, cards business, employee conduct, and compliance with RBI directions. Overall, the Directions aim to strengthen internal controls, improve governance, enhance risk management, and ensure effective regulatory compliance in Small Finance Banks.
