Reserve Bank of India rolls out statutory audit rules and lending‑rate reforms for cooperative banks

The Reserve Bank of India (RBI) issued the Rural Co‑operative Banks – Statutory Audit Directions, 2026, with immediate effect. The directions set a detailed framework for the appointment, re‑appointment, removal, eligibility, independence, tenure and governance of statutory auditors of rural cooperative banks. They require board‑approved auditor policies, prior RBI approval for appointments, branch‑selection covering at least 70% of advances, eligibility criteria based on asset size and audit experience, conflict‑of‑interest restrictions, rotation norms, fee principles and coordination with NABARD. Earlier audit directions are repealed while preserving actions taken under them.

RBI Governor Sanjay Malhotra announced further measures to strengthen the cooperative banking sector. Draft guidelines will be issued to resume licensing of urban cooperative banks and to update the credit‑monitoring framework for rural cooperative banks, which has not been revised since 2008. The RBI also proposed a harmonised regulatory framework for interest rates on advances across all regulated entities to improve transparency and consumer protection. The Monetary Policy Committee kept the repo rate unchanged at 5.25%, forecasting FY27 GDP growth of 6.7% and inflation of 5%.