Regulatory Alerts2026-07-31
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Reserve Bank of India (Commercial Banks - Internal Audit Function) Directions, 2026
These Directions mandate Commercial Banks to adopt a Risk Based Internal Audit (RBIA) framework, requiring the Board to approve an Annual Audit Plan and a risk assessment methodology that utilizes a risk matrix to classify areas as low, medium, high, very high, or extremely high risk. The Head of Internal Audit must report directly to the Audit Committee or Managing Director, maintain functional independence, and receive remuneration unlinked to business line performance, while the Internal Audit Function itself cannot be outsourced, though contractual experts may be engaged under strict supervision. The document explicitly repeals all prior internal audit directions for Commercial Banks and comes into effect immediately upon issuance on July 31, 2026.
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