Section 30 of the Banking Regulation Act, 1949: Audit of Banking Companies
Section 30 of the Banking Regulation Act, 1949 deals with the statutory audit of a banking company. It links the audit to the financial statements prepared under Section 29, requires prior approval of the Reserve Bank of India for appointment, re-appointment or removal of auditors, authorises the RBI to direct a special audit in specified circumstances, and prescribes additional matters that must be addressed in the auditor's report.
Updated: 13 September 2026
- The balance-sheet and profit and loss account prepared under Section 29 must be audited by a person qualified to audit companies.
- A banking company must obtain the previous approval of the RBI before appointing, re-appointing or removing its auditor or auditors.
- The RBI may direct a special audit where it considers this necessary in the public interest or in the interest of the banking company or its depositors.
- The banking company bears the expenses of a special audit ordered by the RBI.
- The auditor's report must additionally address specified banking-specific matters, including information and explanations, powers of the company, branch returns and the true balance of profit or loss.
Meaning and scope of Section 30
Section 30 is the principal audit provision in the Banking Regulation Act for banking companies. In practical terms, it supplements the general company-law framework for auditors with banking-specific requirements and direct supervisory control by the Reserve Bank of India.
The expression "previous approval of the Reserve Bank" in sub-section (1A) means that the required RBI approval must be obtained before the banking company completes the appointment, re-appointment or removal of the auditor. RBI also issues regulatory directions and guidelines governing the eligibility, independence, tenure and appointment process of statutory auditors for regulated entities.
Section 30 - Statutory text
30. Audit.
(1) The balance-sheet and profit and loss account prepared in accordance with section 29 shall be audited by a person duly qualified under any law for the time being in force to be an auditor of companies.
(1A) Notwithstanding anything contained in any law for the time being in force or in any contract to the contrary, every banking company shall, before appointing, re-appointing or removing any auditor or auditors, obtain the previous approval of the Reserve Bank.
(1B) Without prejudice to anything contained in the Companies Act, 1956 (1 of 1956), or any other law for the time being in force, where the Reserve Bank is of opinion that it is necessary in the public interest or in the interest of the banking company or its depositors so to do, it may at any time by order direct that a special audit of the banking company's accounts, for any such transaction or class of transactions or for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order either appoint a person duly qualified under any law for the time being in force to be an auditor of companies or direct the auditor of the banking company himself to conduct such special audit and the auditor shall comply with such directions and make a report of such audit to the Reserve Bank and forward a copy thereof to the company.
(1C) The expenses of, or incidental to the special audit specified in the order made by the Reserve Bank shall be borne by the banking company.
(2) The auditor shall have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 227 of the Companies Act, 1956 (1 of 1956), and auditors, if any, appointed by the law establishing, constituting or forming the banking company concerned.
(3) In addition to the matters which under the aforesaid Act the auditor is required to state in his report, he shall, in the case of a banking company incorporated in India, state in his report,-
(a) whether or not the information and explanations required by him have been found to be satisfactory;
(b) whether or not the transactions of the company which have come to his notice have been within the powers of the company;
(c) whether or not the returns received from branch offices of the company have been found adequate for the purposes of his audit;
(d) whether the profit and loss account shows a true balance of profit or loss for the period covered by such account; and
(e) any other matter which he considers should be brought to the notice of the shareholders of the company.
Amendment history appearing with Section 30 includes substitution of sub-section (1) and insertion of sub-sections (1A) to (1C) by Act 58 of 1968, and amendments relating to special audit by Act 66 of 1988.
RBI approval for appointment, re-appointment or removal of auditors
Sub-section (1A) gives the RBI a direct statutory role in changes concerning the auditor of a banking company. The provision operates notwithstanding a contrary contract or other law. A banking company should therefore examine both Section 30 and the RBI's currently applicable directions or guidelines before taking action concerning its statutory auditor.
Special audit under Section 30(1B)
The RBI may order a special audit if it considers such an audit necessary in the public interest, in the interest of the banking company, or in the interest of its depositors. The order may relate to a particular transaction, a class of transactions, or a specified period. The RBI may appoint a qualified auditor for the special audit or direct the banking company's existing auditor to conduct it.
The auditor must comply with the RBI's directions, submit the special audit report to the RBI and forward a copy to the banking company. Under sub-section (1C), the expenses of or incidental to the special audit are borne by the banking company.
Additional matters in the auditor's report
Sub-section (3) imposes banking-specific reporting duties in addition to the auditor's general duties under company law. For a banking company incorporated in India, the report must address whether the required information and explanations were satisfactory, whether transactions noticed by the auditor were within the company's powers, whether branch returns were adequate for audit, whether the profit and loss account shows a true balance of profit or loss, and any other matter that should be brought to the shareholders' notice.
Related provisions
Section 30 should be read with Section 29 - Accounts and balance-sheet, which governs preparation of the financial statements that are subject to audit. The wider Banking Regulation Act framework also contains provisions relating to returns, information, inspection and RBI supervisory powers.
Official legal and regulatory sources
India Code - Banking Regulation Act, 1949