The Reserve Bank of India (Urban Co-operative Banks – Statutory Audit)
Directions, 2026 establish guidelines for the appointment, eligibility, independence,
tenure, and responsibilities of Statutory Central Auditors (SCAs) / Statutory Auditors
(SAs) of Urban Co-operative Banks (UCBs). These Directions apply to all UCBs and
require them to follow a transparent and Board-approved process for auditor
appointment and oversight.
The Board and Senior Management of UCBs are responsible for ensuring auditor
independence, reviewing audit performance, reporting significant audit lapses to RBI,
and maintaining proper governance mechanisms. The Directions prescribe norms
relating to the number of auditors, branch audit coverage, eligibility criteria,
professional qualifications, audit experience, and staffing requirements based on the
asset size and complexity of UCBs.
The Directions also specify auditor tenure, rotation requirements, conflict-of-interest
restrictions, audit fee considerations, and professional standards. UCBs must obtain
prior approval from RBI for appointment or reappointment of SCAs/SAs, verify
compliance with eligibility requirements, and submit necessary documentation.
Existing statutory audit guidelines are repealed, while actions taken under earlier
provisions remain valid. RBI may issue clarifications for effective implementation of
these Directions.
