Mumbai: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 41.80 lakh on Canara Bank for failing to follow certain regulatory guidelines related to Know Your Customer (KYC) norms and the handling of inoperative accounts.
The action was announced by the central bank on Friday following its supervisory review of the public sector lender.
What the RBI Found?
According to the RBI, Canara Bank did not upload KYC details of some customers to the Central KYC Records Registry (CKYCR) within the required time limit.
The regulator also found that the bank had classified some customer accounts as inoperative even though the last customer-initiated transaction in those accounts had taken place less than one year earlier.
These findings were identified during the Statutory Inspection for Supervisory Evaluation (ISE 2025), which examined the bank's financial position as of March 31, 2025.
RBI Issued Notice Before Penalty
Following the inspection, the RBI issued a show-cause notice to Canara Bank asking why a penalty should not be imposed for violating regulatory directions.
The bank submitted its written response and also made additional representations during a personal hearing.
After reviewing the bank's explanations and records, the RBI concluded that the violations were established and warranted a financial penalty.
Penalty Under Banking Regulation Act
The penalty has been imposed under powers granted to the RBI under the Banking Regulation Act, 1949.
The central bank clarified that the action relates only to shortcomings in regulatory compliance. It does not question the validity of any transaction or agreement between the bank and its customers.
More Action Possible
The RBI further stated that the monetary penalty does not prevent it from taking any other regulatory action against the bank in the future, if required.
The regulator regularly conducts inspections of banks to ensure compliance with banking rules, customer protection norms and financial system stability.
