RBI issues new guidelines on concurrent auditing at branches

The Reserve Bank today said the concurrent audit at bank branches should cover at least half of their advances and deposits.
The concurrent audit system is regarded as part of a bank's early warning system to ensure timely detection of irregularities and lapses.
"Concurrent audit at branches should cover at least 50 per cent of the advances and 50 per cent of deposits of a bank," RBI said in a notification.
It said branches rated as high risk or above in the last risk-based internal audit (RBIA) or serious deficiencies found in internal audit are subject to concurrent audit.
The audit will also be applicable on all specialised branches like large corporate, mid corporate, exceptionally large/very large branches, SMEs and all centralised processing units like loan processing units (LPUs).

Besides, it would include service branches, centralised account opening divisions, wealth and portfolio management services, card products divisions, data centres and treasury/ foreign exchange business, investment banking, among others.

The concurrent audit also helps in preventing fraudulent transactions at branches.
The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down, the RBI said.
The scope of concurrent audit should be wide enough or focused to cover certain fraud-prone areas such as handling of cash, deposits, advances, foreign exchange business, off-balance sheet items, credit-card business, Internet banking, it added.

The regulator said appointment of an external audit firm for concurrent audit may be initially for one year and extended up to three years, after which an auditor could be shifted to another branch, subject to satisfactory performance.