Banks brace for auditor shuffle in New Year as per RBI's three year tenure mandate
RBI in FY 2020-21 had mandated to rotate every three years and now Banks are gearing up to change their auditors for the fiscal year 2024-25, following RBI’s mandate. This process, aimed at enhancing transparency and accountability, has been met with challenges for both financial institutions and auditing firms. Banks are required to shortlist potential auditors by the end of the March 2024 quarter, followed by obtaining board approval. Subsequently, the shortlisted candidates will be presented at the Annual General Meeting (AGM), expected to take place in May of the following year. The final step involves seeking approval from the RBI, a process that extends the timeline further, ultimately resulting in the new auditor taking charge, typically in the second quarter.
The RBI's strategic move also includes measures to build audit capacity, and notably, it has imposed restrictions on the "BIG 4" auditing firms, limiting them to servicing only four banks and eight non-banking financial companies (NBFCs) for audit purpose.
