RBI imposes ₹41.80 lakh penalty on Canara Bank for KYC and inoperative account violations

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹41.80 lakh on Canara Bank for non-compliance with regulatory directions related to Know Your Customer (KYC) norms and the handling of inoperative accounts. The action followed a supervisory review that identified deficiencies in the bank’s compliance with prescribed regulatory requirements.

According to the RBI, the bank failed to upload KYC records of certain customers to the Central KYC Records Registry (CKYCR) within the stipulated time frame. The regulator also found that some customer accounts had been classified as inoperative despite the last customer-induced transaction having taken place less than one year earlier.

The violations were identified during the Statutory Inspection for Supervisory Evaluation conducted with reference to the bank’s financial position as of March 31, 2025. Following the inspection, the RBI issued a show-cause notice to Canara Bank asking why a penalty should not be imposed for the observed non-compliance with regulatory directions.

The bank submitted its written response to the notice and also made additional representations during a personal hearing before the regulator. After examining the bank’s submissions and reviewing the available records, the RBI concluded that the compliance breaches had been established and warranted the imposition of a monetary penalty.

The penalty was imposed under powers vested in the RBI by the Banking Regulation Act, 1949. The central bank stated that the action was based solely on deficiencies in regulatory compliance and did not affect the validity of any transaction or agreement entered into between the bank and its customers. The RBI also noted that the penalty does not preclude any further regulatory action that may be considered necessary in the future.