CA Final Audit RTP January 2026
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emailtoshrutiguptaCA Final Audit RTP January 2026
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Powered by AIClause (5) Part II of the Second Schedule of the CA Act, 1949, supports the Companies Act, 2013, by prohibiting auditors from conducting audits in violation of the latter's provisions. This clause ensures auditors uphold the legal standards set by the Companies Act, reinforcing ethical practices in financial audit engagements .
NBFCs must evaluate their current asset structures, segregate risk-weighted assets, and ensure a 12% Tier 1 capital adequacy ratio on both on and off-balance sheet items by April 2026. They also need to adapt to deferred tax assets and liabilities provisions, necessitating robust financial management strategies to comply with these impending RBI directives .
An NBFC-MFI that fails to meet the requirement of having at least 60% of its total assets (net of intangible assets) in microfinance loans for four consecutive quarters is obligated to approach the Reserve Bank of India with a plan for remediation. This requirement ensures that NBFC-MFIs remain committed to their core mission of providing microfinance and prevents deviation into other potentially riskier financial activities .
Under Clause 9 Part I of the First Schedule of the CA Act 1949, an auditor must first ascertain whether the company has complied with the relevant sections of the Companies Act, such as Section 225 of the Companies Act, 1956, or Sections 139 to 141 of the Companies Act, 2013, before accepting an appointment. This ensures all legal protocols around auditor appointments are adhered to .
NBFCs might encounter challenges such as raising additional equity to meet the 12% Tier 1 capital requirement, restructuring or shutting down non-compliant loan segments, and managing the transition costs. Smaller NBFCs could be particularly impacted, facing restricted growth or needing to merge with larger entities to effectively meet these stringent capital adequacy norms .
The RBI enforces compliance through requirements for net owned funds adjustments and by mandating NBFCs like NBFC-MFIs to maintain specific asset deployment percentages, and if not met, to provide remediation plans. Additionally, the RBI mandates capital requirements for NBFCs involved in significant gold lending, showcasing its role in maintaining financial prudence and stability .
The RBI mandates that NBFCs with gold-related loans making up 50% or more of their asset portfolio maintain a minimum Tier 1 capital of 12% of adjusted risk-weighted assets. This directive, effective by April 1, 2026, aims to enhance financial stability within NBFCs heavily involved in gold loans .
The RBI's glide path for increasing net owned funds is designed to ensure NBFCs have sufficient capital cushions to absorb financial shocks, contribute to systemic stability, and maintain consumer confidence. This directive encourages NBFCs to fortify their balance sheets progressively, thus promoting long-term financial health and resilience against economic downturns .
The glide path requires NBFC-ICC to have ₹10 Cr, NBFC-MFI ₹10 Cr, and NBFC-Factor ₹10 Cr by March 31, 2027. For NBFCs in the northeastern regions, the requirements are slightly lower: NBFC-MFIs need ₹5 Cr by March 31, 2025, and ₹10 Cr by March 31, 2027. These requirements might pressure smaller NBFCs, especially in less developed regions, to consolidate or seek additional funding sources to meet compliance .
NBFC-MFIs are required to deploy a minimum of 60% of their total assets, net of intangible assets, towards 'microfinance loans' on an ongoing basis. If an NBFC-MFI fails to maintain this criterion for four consecutive quarters, it must submit a remediation plan to the Reserve Bank of India (RBI).