Reserve Bank of India (Urban Co-operative Banks – Concurrent Audit) Directions, 2026

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.

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.

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.

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.

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.

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.