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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

RBI issues Reserve Bank of India (Small Finance Banks - Internal Audit Function) Directions, 2026

31-Jul-2026 | RBI/DoS/2026-27/422 DoS.CO.PPG.16/11.01.005/2026-27

RBI has issued Reserve Bank of India (Small Finance Banks - Internal Audit Function) Directions, 2026 with effect from 31st July, 2026 Key highlights are as follows: 1. In view of the limitations of a transaction-centric audit approach, the bank is required to adopt Risk Based Internal Audit (RBIA), which places emphasis on the assessment of risk management systems and internal controls, in addition to selective transaction testing, in alignment with evolving governance standards and international best practices 2. The Board shall be responsible for ensuring that an effective RBIA system is in place, and its importance is understood throughout the bank 3. The Senior Management shall ensure that the importance of an effective RBIA system is understood throughout the bank, and the Internal Audit staff perform their duties with objectivity and impartiality 4. The risk assessment should, as an independent activity, cover risks at various levels (corporate and branch; the portfolio and individual transactions, etc.) as also the processes in place to identify, measure, monitor, and control the risks 5. The bank shall ensure that the Internal Audit function has sufficient authority, stature, independence, and resources within the bank, thereby enabling internal auditors to carry out their assignments with objectivity For more information, please refer the attached pdf

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