Reserve Bank of India (Urban Co-operative Banks – Concurrent Audit) Directions, 2026
UR
- Applies toUrban co-operative banks
- StatusIn force
- IssuedJul 31, 2026
- Amendmentsnone tracked
- Length45 points in 5 sections · 4 min read
The four dates on this rule
- PublishedJul 31, 2026The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyJul 31, 2026The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Chapter I. Preliminary
1. In force at once
These Directions took effect at once when issued.
2. Who is covered
These Directions apply to urban co-operative banks.
Chapter II. Governance and Oversight
1. A yearly board review
The board must review the system's effectiveness once a year and fix its gaps.
2. The committee tracks action
The audit committee reviews the action taken on audit reports and their compliance.
Chapter III. Guidelines for Concurrent Audit System
Must know
1. Not a second judge
The auditor may not sit in judgment over the bank's business decisions.
2. Currency chest reported
Currency chest transactions must be accounted properly and reported promptly to RBI.
3. Full check above five lakh
Sensitive areas and loans above ₹5 lakh with unusual features may be checked in full.
4. Routine areas sampled
For routine areas like interest and clearing, checks may cover 10 to 25 per cent of transactions.
BankPulse example. A concurrent auditor looks at the month's interest and clearing entries. There are 4,000 such transactions. The check can be restricted to 10 to 25 per cent of them, which is 400 to 1,000 entries.
5. Lapses go to institute
A serious lapse can end the appointment and be reported to the accountants' institute, with RBI and the registrar told.
6. Quarterly investment certificate
Each quarter the auditors certify the bank really holds the investments it reported to RBI.
7. Thirty days to file
That certificate goes to RBI's supervisory manager within thirty days of the quarter's end.
8. No double hats
A firm doing the concurrent audit may not also do the statutory audit in the same period.
Do it
9. Treasury must be audited
Head office treasury work, from investments and funds management to foreign exchange, must be under concurrent audit.
10. Sanctions at right level
Loans must be sanctioned after due scrutiny and at the appropriate level.
11. Guarantees on the register
Bank guarantees must be properly worded, recorded in the register and renewed on their due dates.
12. Export claims in time
Claims to the export credit guarantee corporation must go in on time.
13. Excesses reported and ratified
Every time someone acts beyond their powers, it must be reported quickly and confirmed at the right level.
14. Forward contracts authorised
Extending or cancelling a forward contract needs proper authority. The charges must be recovered too.
15. Nostro accounts reconciled
Nostro and Vostro account balances must be verified and reconciled.
16. No parking in suspense
Clearing differences must be located, not booked away in a suspense account.
17. Own staff must be senior
In house auditors must be experienced and senior enough to stay independent and objective.
18. Rotate the auditors
Auditors must be rotated from time to time. This holds for own staff and outside firms alike.
19. Grow skills within
Over time the bank should build audit skills within and lean less on outside firms.
20. Government securities verified
Auditors must check the bank follows the investment rules for government securities.
21. Step down first
The firm must give up the concurrent audit before taking up the statutory audit that year.
Background
22. Management designs the system
The bank's management decides the details of its concurrent audit system.
23. What concurrent audit is
A concurrent audit examines transactions as they happen, or as near to that as possible.
24. Substance over sampling
The audit leans on substantive checking of key areas rather than test checks.
25. Within policy and powers
The auditor checks that decisions stay within policy and do not breach RBI's instructions.
26. Problem branches watched
Branches rated poor in inspections, with weak housekeeping, may be put under concurrent audit.
27. Abnormal cash flagged
Daily cash is checked, with a sharp eye on abnormal receipts and payments.
28. Securities held physically
The auditor confirms that securities on the branch's books are physically held.
29. Deposit interest rechecked
A share of deposit interest payouts is rechecked. Large deposits get their sums checked closely.
30. New accounts watched early
Operations in new accounts are checked in the initial period for anything unusual.
31. Watching for diversion
The auditor looks for misuse of loans and signs of funds being diverted.
32. Revenue leaks hunted
The audit hunts revenue leakage through close checks of income and expense accounts.
33. Complaints handled promptly
The auditor confirms customer complaints are dealt with promptly.
34. High value first
Auditors concentrate on high value transactions rather than many small ones.
35. Pay set with registrar
External auditors' terms and pay are fixed within guidelines approved by the board or the state registrar.
36. Firms answer for lapses
Audit firms answer for omissions in the transactions they saw.
37. Minor faults fixed on spot
Minor irregularities and wrong calculations go to the branch manager for on-the-spot fixing.
38. A week, then upstairs
Faults unfixed within about a week go to head office; serious ones go at once.
39. Serious cases to supervisor
Serious wrongs found in the audit go at once to RBI's supervisory manager.
Chapter IV. Repeal and Other Provisions
1. Old guidance repealed
The old concurrent audit circulars for these banks stand repealed.
2. Old actions stay governed
Action already taken under the old rules stays governed by them.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for urban co-operative banks
RBI capital adequacy rules for urban co-operative banks 2025
RBI compliance officer and compliance function rules for urban co-operative banks
RBI credit bureau reporting rules for urban co-operative banks 2025
RBI credit card and debit card rules for urban co-operative banks 2025
RBI customer service and fair conduct rules for urban co-operative banks 2025
RBI deposit interest rate rules for urban co-operative banks 2025
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