The Reserve Bank of India (RBI) has imposed a penalty of Rs 41.80 lakh on Canara Bank for failing to adhere to certain guidelines related to ‘Know Your Customer (KYC)’ and ‘Unclaimed Deposits and Inoperative Accounts in banks’. An inspection by the RBI found that Canara Bank did not upload KYC records of some customers onto the Central KYC Records Registry within the specified timeframe. Additionally, the bank wrongly categorized certain accounts as inoperative, despite recent customer transactions.
This penalty has been enforced under the powers granted to the RBI by the Banking Regulation Act, 1949. The RBI’s Statutory Inspection for Supervisory Evaluation (ISE 2025) of Canara Bank, based on its financial status as of March 31, 2025, revealed non-compliance with RBI directives. Following this, the bank was notified to explain why a penalty should not be imposed for the violations.
After reviewing the bank’s responses, additional submissions, and oral arguments during a personal hearing, the RBI concluded that Canara Bank had indeed breached KYC norms and inoperative account regulations. As a result, a monetary penalty was deemed necessary. The regulatory action is focused on compliance shortcomings and does not question the validity of any customer transactions or agreements entered into by the bank.
