RBI imposes Rs 41.8 Lakh penalty on Canara Bank over KYC lapses

The Reserve Bank of India imposed a penalty of ₹41.8 lakh on Canara Bank for non-compliance with KYC norms and rules on inoperative accounts. The RBI found lapses in timely reporting to CKYCR and incorrect account classification after inspection

Mumbai: The Reserve Bank of India (RBI) on Friday imposed a penalty of Rs 41.80 lakh on Canara Bank for not complying with certain provisions of directions issued by the central bank on ‘Know Your Customer (KYC)’ and ‘Unclaimed Deposits and Inoperative Accounts in banks’.

An inspection of Canara Bank carried out by the RBI revealed that the bank did not upload KYC records of certain customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline. Canara Bank also classified certain accounts as inoperative, despite the last customer-induced transaction being less than one year old in such accounts, according to a Reserve Bank statement.

---

This penalty has been imposed in exercise of powers conferred on the RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949, the RBI said.

The Statutory Inspection for Supervisory Evaluation (ISE 2025) of the bank was conducted by the RBI with reference to its financial position as on March 31, 2025.

Based on the supervisory findings of non-compliance with the provisions of RBI directions, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for its failure to comply with the said provisions of RBI directions.

After considering the bank’s reply to the notice, additional submissions made by it, and oral submissions made during the personal hearing, the RBI found that the charges on non-compliance with KYC norms and inoperative accounts rules against the bank were sustained, warranting imposition of a monetary penalty, the statement added.

The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, the imposition of a monetary penalty is without prejudice to any other action that may be initiated by the RBI against the bank, as per the statement.