Mumbai: The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹41.8 lakh on public sector lender Canara Bank for non compliance with certain regulatory provisions related to Know Your Customer (KYC) norms and the handling of inactive accounts. The action follows a supervisory evaluation conducted by the central bank.
According to the RBI, the penalty was imposed after deficiencies were identified during the Inspection for Supervisory Evaluation (ISE 2025), conducted with reference to the bank’s financial position as of March 31, 2025. The central bank found that Canara Bank had failed to upload KYC records of certain customers to the Central KYC Records Registry (CKYCR) within the prescribed timeline.
The RBI also observed irregularities in the classification of customer accounts. It noted that some accounts had been marked as inoperative despite customer initiated transactions having taken place within the previous year. Such classification was found to be inconsistent with the regulatory framework governing dormant and inactive accounts.
In its statement, the RBI clarified that the penalty was based on shortcomings in statutory and regulatory compliance and should not be interpreted as a judgment on the validity of any transactions or agreements entered into by the bank with its customers. The central bank stressed that the action was intended to address compliance failures and reinforce adherence to established banking norms.
KYC compliance remains a critical component of India’s banking system, helping financial institutions verify customer identities, prevent fraud, combat money laundering and strengthen financial security. The RBI has repeatedly highlighted the importance of timely KYC updates and proper management of inactive accounts to safeguard customers and maintain the integrity of the banking sector.
The latest action is part of the RBI’s broader supervisory approach aimed at ensuring that banks and financial institutions strictly comply with regulatory requirements. Over the past few years, the central bank has imposed penalties on several lenders for violations related to KYC norms, customer due diligence and other compliance obligations.
Canara Bank has not reported any impact on its banking operations due to the penalty. The lender continues to provide regular banking and financial services across its nationwide network.
The RBI’s move serves as a reminder to financial institutions about the importance of maintaining robust compliance systems and ensuring timely adherence to customer verification and account management guidelines.