The Reserve Bank has directed select Non-Banking Financial Companies (NBFCs) and Urban Co-operatives Banks (UCBs) to implement a risk-based internal audit system.
In a notification, the RBI said all deposit taking NBFCs, all non-deposit taking NBFCs with asset size of 5,000 crore rupees and above and all urban cooperative banks with asset size of 500 crore rupees and above will have to implement the system by March 2022.
Currently, all the entities supervised by the RBI have their own approaches on internal audit, resulting in certain inconsistencies, risks and gaps in the system.
The RBI statement said that new syestem will assure the bank’s board and senior management about the quality and effectiveness of the entity’s internal control, risk management and governance framework.
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