The revised LFAR format will likely be put into operation for the interval overlaying 2020-21 and onwards, the central financial institution stated.
“The overall objective of the LFAR should be to identify and assess the gaps and vulnerable areas in the business operations, risk management, compliance and the efficacy of internal audit and provide an independent opinion on the same to the Board of the bank and provide their observations,” the RBI stated.
While issuing the revised norms, the RBI requested the banks to make sure well timed receipt of the LFAR from auditors.
It additional stated that the LFAR needs to be positioned earlier than the Audit Committee of Board and Local Advisory Board of the financial institution indicating the motion taken or proposed to be taken for rectification of the irregularities.
Under the brand new norms, the banks can be required to ship a duplicate the LFAR and the relative agenda be aware, along with the Board’s views or instructions, to the Reserve Bank inside 60 days of submission of the LFAR by the statutory auditors.
The RBI additional stated the protection within the LFAR needs to be ‘credit score danger areas’, ‘market danger areas’, assurance capabilities and operational danger areas’, ‘capital adequacy’ and ‘going concern and liquidity danger evaluation’, amongst others.