The Reserve Bank of India (RBI) has issued net set of guidelines pertaining to risk-based internal audit (RBIA) framework for Non-Banking Financial Companies (NBFCs) and Primary (Urban) Co-operative Banks (UCBs) that are needed to be implemented by March 21, 2022.
The RBI’s framework specifically made it mandatory for supervised entities (SEs) — all deposit-taking NBFCs; all non-deposit taking NBFCs (including Core Investment Companies) with asset size of Rs5,000 crore and above; and all UCBs with asset size of Rs 500 crore and above for upgrading the efficacy of their internal audit systems and processes.
RBI has directed the SEs to present the RBI circular before their Board in its upcoming meeting. The implementation of these guidelines in adherence to the timeline mentioned should be done under the supervision of the Board.
The banking regulator has observed that the internal audit function should assess and put their contribution broadly to the inclusive improvement of the organization’s governance, risk management, and control processes applying a systematic and disciplined approach.