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

RBI issues Reserve Bank of India (Urban Co-operative Banks - Internal Audit Function) Directions, 2026

31-Jul-2026 | RBI/DoS/2026-27/440 DoS.CO.PPG.34/11.01.005/2026-27

RBI has issued Reserve Bank of India (Urban Co-operative Banks - Internal Audit Function) Directions, 2026 with effect from 31st July 2026 Key highlights are as follows: - 1. This Direction shall be applicable to all Urban Co-operative Banks (UCBs) however Chapter II, III and IV of this Direction shall be applicable to those UCBs having asset size of ₹500 crore and above except Salary Earners UCBs, Unit UCBs, and UCBs under All Inclusive Directions. Further, Chapter V of this Direction shall be applicable to those UCBs having asset size of less than ₹500 crore, all Salary Earners UCBs, Unit UCBs, and UCBs under All Inclusive Directions. 2. Chapter II pertains to Governance and Oversight: a. The Board/Audit Committee of the Board (ACB) has been made responsible for oversight of the Internal Audit function and approval of the Risk-Based Internal Audit (RBIA) Plan. b. The Board/ACB must review the effectiveness of RBIA and implement an annual quality assurance and improvement programme. 3. Chapter III states Risk-Based Internal Audit (RBIA) Framework: a. Every eligible UCB shall establish a Board-approved Risk-Based Internal Audit Policy clearly defining the purpose, authority, responsibilities and independence of Internal Audit. b. RBIA shall independently assess governance, internal controls and risk management systems using a systematic and disciplined approach. c. Internal Audit shall remain functionally independent and adequately resourced. 4. Chapter V pertains to Inspection and Internal Audit System: a. UCBs covered under this Chapter must maintain a robust Inspection and Internal Audit system headed by a senior officer reporting directly to the Chairman. b. Inspection staff should possess adequate experience and ordinarily complete a minimum of three years in the Inspection Department before promotion. For more information kindly refer the attached document

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