1. Background:

The Reserve Bank of India (RBI) has issued Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) vide their notification REF.NO.DOS.CO.ARG/SEC.01/08.91.001/2021-22 DATED 27^TH APRIL 2021 (RBI REGULATIONS). In line with the same this policy has been prepared and hosted on the website.

2. Applicability:

This Policy will be applicable from the Financial Year 2021-22 onwards in respect of appointment/reappointment of Statutory Auditors.

3. Objective of the Policy:

The primary objective of the policy is to lay down a framework and procedures for appointing Statutory Auditors in compliance with all the Regulatory provisions (like RBI REGULATIONS, provisions of Companies Act, 2013 (CA 13).

4. Number of Statutory Auditors:

The number of Statutory Auditors will be based upon the criteria prescribed by Reserve Bank of India in this matter.

The present directive is to appoint a minimum of one audit firm (Partnership firm/LLPs) since the asset size of the Company is less than Rs.15000 Crs. as at the end of previous year, as per RBI Regulations. 

5. Procedure of Appointment of Statutory Auditors

The company shall obtain a certificate, along with relevant information as per FORM B from the audit firms(s) proposed to be appointed as Statutory Auditors by the company to the effect that the Audit Firm(s) complies with all the eligibility norms prescribed by that RBI for the purpose. Such certificate should be signed by the main partner/s of the Audit Firm.

The audit firm should not under debarment by any Government Agency/Institute of Chartered Accountants of India (ICAI), RBI or any other financial regulator.

The Experience of the Audit Firm in audit of Banking / NBFC’s

After considering the above, the Audit Committee will select the auditors and recommend to the Board for approval after which shareholders’ approval will be sought.

6. Period of Appointment:

The Auditors shall be appointed for such number of years as prescribed by Reserve Bank of India.

While NBFCs do not have to take prior approval of RBI for appointment of SAs, all NBFCs need to inform RBI for each year by way of a certificate in FORM A within one month of such appointment.

As per the present directive, the Company is required to appoint one audit firm (Partnership firm/LLPs) for a continuous period of three years, subject to the firms satisfying the eligibility norms each year and would not be eligible for reappointment for six years.

7. Independence of Auditors

The Board of Directors shall monitor and assess the independence of the Auditors. Any concerns in this regard may be flagged by the Board to the Reserve Bank of India.

The concurrent auditors of the company should not be considered for appointment as Statutory Auditors.

8. Professional Standards of the Auditors

The Board/ACB shall review the performance of the Auditors on an Annual Basis. Any serious lapses/negligence in audit responsibilities or conduct issues on part of the auditor or any other matter considered as relevant shall be reported to RBI within two months from completion of annual audit.

9. Audit Fee and Expenses
   

Audit fees for Statutory Auditors shall be reasonable and commensurate with the scope and coverage of audit, size and spread of assets, accounting and administrative units, complexity of transactions, level of computerization, identified risks in financial reporting etc.,