On Tuesday, Reserve Bank of India issued guidelines for appointment of Statutory auditors of banks and Non Banking Finance Companies. These guidelines will be applicable from the financial year 2021-2022 onwards.
These guidelines includes instructions like appointment if Statutory auditors, the number of auditors, the numbers of audits and their eligibility criteria, tenure and their promotions etc. These guidelines said that the UCBs have to take permission and get approval from Reserve Bank of India for the appointment of SCAs Or SAs on yearly basis.
And these entities may finalise the work allocation among SCAs /SAs before the commencement of the statutory audit, in consultation with their SCAs and SAs.
And these guidelines further includes the entities will have to appoint the SCAs andSAs for the continuation of the period about 3 years this was implemented to protect the freedom and the working session of the auditors and audit firms.
These guidelines are issued under Section 30(1A) of Banking Regulation Act, 1949.Section 10(1) of the Banking Companies Act 1970. And NBFCs doesn’t have any prior permission of Reserve Bank of India for SCAs and SAs appointment for entities with an asset size of about Rs. 15,000 crore as at the end of previous year.