RBI introduces risk-based internal audit norms for NBFCs, UCBs

RBI introduces risk-based internal audit norms for NBFCs, UCBs

Part of: GS Prelims and GS-III – Economy

In news

• The RBI recently announced the introduction of risk-based internal audit norms for large urban cooperative banks (UCBs) and non-banking financial companies (NBFCs).

Key takeaways

• Aim of the introduction: Improving governance and assurance functions at supervised entities.
• The guidelines related to the appointment of statutory auditors for commercial banks, UCBs and NBFCs in order to improve the quality of financial reporting were also laid out.
• The growing significance of NBFCs and their interlinkages with different parts of the financial system had made it imperative to enhance the sector’s resilience. 
• Thus it had been decided to put in place transparent criteria for the declaration of dividends by different categories of NBFCs.
• Regional rural banks would be allowed to access the liquidity adjustment facility (LAF), marginal standing facility (MSF) of the RBI and call/notice money market.
• The RBI has proposed to issue Digital Payment Security Controls directions for the regulated entities in order to improve the ecosystem of digital payment channels with better security and convenience for users.

Related articles:

• Know more about NBFCs: Click here

• RBI’s measures to boost economy: Click here

• Marginal Standing Facility: Click here