Reserve Bank issues guidelines for appointment of Statutory Auditors of Banks and NBFCs

The Reserve Bank of India on Tuesday issued guidelines regarding the appointment of Statutory Auditors to non-banking finance companies (NBFCs), including banks and housing finance companies. The Reserve Bank stated that ‘Guidelines relating to Statutory Central Auditors (SCAs) / Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) will come into effect from FY 2021-22’. The central bank has also clarified that NBFCs with an asset size of Rs 1,000 crore, which does not accept deposits, can continue to adopt the current process.

The Reserve Bank has said, “The guidelines provide necessary instructions regarding the appointment of SCAs / SAs, number of auditors, tenure duration, rotation, etc.”

The central bank has said that this step has been taken to ensure the independence of the auditors.

These guidelines are being implemented for the first time from 2021-22 for Urban Co-operative Banks (UCBs) and NBFCs. In such a situation, UCBs and NBFCs will be allowed to implement these guidelines from the second half of the current financial year. This has been done so that no obstruction occurs.

Banks and UCBs will have to obtain RBI approval on yearly basis for appointment or reappointment of SCAs / SAs. It has been said in the new guidelines.

Earlier on Monday, the central bank issued guidelines for the age and tenure of MDs, CEOs, and full-time directors of private banks. According to the new guidelines of the central bank, no person can hold the post of Managing Director (MD), CEO, and full-time director for more than 15 consecutive years.

With this, MDs or CEOs of private banks cannot continue in their posts after the age of 70 years. According to the RBI, the maximum age limit of 75 years has been fixed for the chairman and non-executive director of the private ban

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