RBI Imposes Rs 41.8 Lakh Penalty on Canara Bank Over KYC and Regulatory Compliance Lapses

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 41.8 lakh on Canara Bank for failing to comply with certain regulatory requirements, including provisions related to Know Your Customer (KYC) norms. The action follows the central bank's supervisory assessment of the lender and underscores RBI's continued focus on strengthening compliance standards across the banking sector.

RBI Imposes Rs 41.8 Lakh Penalty on Canara Bank Over Regulatory Lapses

According to the regulator, the penalty was imposed after deficiencies were identified during the Inspection for Supervisory Evaluation (ISE) 2025, which reviewed the bank's financial position as of March 31, 2025. The assessment revealed instances where the bank failed to upload the KYC details of certain customers to the Central KYC Records Registry (CKYCR) within the stipulated timeframe prescribed under regulatory guidelines.

RBI Flags KYC and Account Classification Lapses

Apart from the KYC-related shortcomings, the RBI also found irregularities in the classification of certain customer accounts. The bank had reportedly marked some accounts as inoperative even though the last customer-initiated transaction in those accounts had taken place less than a year earlier, contrary to applicable regulatory norms.

The central bank concluded that these lapses warranted supervisory action and consequently imposed the financial penalty under its regulatory powers.

Separate Penalty on Puran Associates

In a separate action, the RBI also levied a penalty of Rs 3.1 lakh on Puran Associates Pvt Ltd for non-compliance with certain provisions relating to asset classification norms.

The regulator noted that the penalty was based on shortcomings in adherence to prescribed regulatory directions and supervisory requirements.

The RBI emphasised that both penalties stem solely from deficiencies in regulatory compliance. The central bank clarified that the actions should not be interpreted as a judgment on the validity of any transaction, agreement or business arrangement entered into by the entities with their customers.