Vertical Bank Ltd. (VBL) is an Indian private sector bank headquartered in New Delhi. It offers services across these verticals: corporate and institutional banking, commercial banking, branch and business banking, retai

Vertical Bank Ltd. (VBL) is an Indian private sector bank headquartered in New Delhi. It offers services across these verticals: corporate and institutional banking, commercial banking, branch and business banking, retail assets, development banking and financial inclusion, treasury and financial market operations. Share price of VBL has taken a hit in last quarter due to increase in provision of non-performing assets. VBL, as a part of good corporate governance, has implemented internal audit function on early identification, proper classification and provisioning of non-performing assets. RBI guidelines are getting updated/changed on regular basis and to ensure compliance of the same, a separate department has been set up with persons having requisite knowledge and expertise. For the FY 2023-2024, Singh & Associates, Chartered Accountants have been appointed as statutory auditors and auditors will be commencing audit from 15.04.2024. Management of the Bank has asked internal audit team to check the classification and provisioning of NPAs at its end so that statutory auditors do not give any adverse report in the form of memorandum of changes. The following information has been extracted for internal audit team: Classification NPA Amount (Rs in Lakhs) Provision Made (Rs in Lakhs) Standard (other than Comm. Real estate and SME) 10000.00 25.00 Standard (Comm. Real estate) 500.00 2.50 Sub-standard 3500.00 350.00 Doubtful (Secured and 18 months category) 1000.00 250.00 Doubtful (Unsecured and 18 months category) 500.00 250.00 Considering above, answer the following: What features of banking operations make internal audit of banks challenging ?