Concurrent Audit

A concurrent audit is near-real-time examination of bank branch transactions — typically monthly — to identify irregularities, KYC lapses, and NPA slippages before they become systemic. RBI mandates concurrent audit for branches with credit exposure above the bank's internally set threshold (usually ₹20–50 crore) under its Risk-Based Internal Audit (RBIA) guidelines.

Typical scope: loan disbursements and documentation completeness, drawings above sanctioned limits, KYC compliance for new accounts, cash and vault management, revenue leakage (income not posted to the correct account), suspense and sundry account ageing, and compliance with the bank's internal credit policy. Exceptions are reported monthly to the branch manager and internal audit department.

A concurrent auditor is appointed by the individual bank (not shareholders or RBI) on a contract basis, testing transactions continuously. A statutory auditor is appointed by shareholders under Section 139 of the Companies Act 2013 and RBI empanelment, and gives an annual opinion on the financial statements. Both roles cannot be held by the same firm for the same branch simultaneously.

The LFAR is prepared by the statutory branch auditor (not the concurrent auditor) at year-end, covering: quality of advances, adequacy of provisioning, NPA identification, income recognition, and internal control weaknesses. The format is prescribed by RBI and submitted to the bank's head office. LFAR observations feed into the bank-level statutory audit opinion.

Concurrent auditors must be CA firms empanelled by the specific bank — each bank maintains its own panel. Typical criteria: at least one Fellow CA in the firm, experience in bank audits, no adverse ICAI disciplinary orders. RBI does not centrally empanel concurrent auditors — it is entirely the bank's decision based on its empanelment policy.