The Reserve Bank of India (RBI) Governor Shaktikanta Das said on April 27 the central bank was doing a fresh assessment of the quality and the coverage of statutory branch audit in private sector banks.
“As regards to statutory branch audit of private sector banks, we are doing a fresh assessment of quality and coverage of such audits,” Das said. “In the RBI, we attach a lot of attention to skill building and capacity development of our employees.”
The RBI governor was addressing the Global Conference on Financial Resilience.
The comments are significant against the backdrop of rising instances of accounting irregularities reported in some of the large banks over the last few years.
The central bank recently revised the guidelines for statutory branch
audits of Public Sector Banks (PSBs) according to which a minimum of
70 percent of credit exposure of a bank is required to be covered.
From financial year 2023-24 onwards, the Board of Directors of PSBs will decide on the coverage of branch audit and selection of branches.
While doing so, the Boards are required to keep in mind the specific characteristics of individual banks like the bank’s business and risk profile, geographical spread, degree of centralisation of processes, etc.
"We expect the Boards of banks to exercise the highest level of diligence while deciding on these issues," Das said while addressing the Global Conference on Financial Resilience.
The Reserve Bank as the supervisor has a keen interest in the functioning of statutory auditors of the Regulated Entities. Wherever necessary, we engage with the external statutory auditors on issues of critical nature in individual banks and financial entities, Das said.
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