RBI Imposes Penalty on Canara Bank Over KYC Compliance Lapses and Inactive Account Classification Errors

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹41.8 lakh on Canara Bank for failing to comply with certain regulatory requirements, including provisions related to Know Your Customer (KYC) compliance and the handling of inactive customer accounts.

According to a statement issued by the central bank on Friday, the action follows findings from the Inspection for Supervisory Evaluation (ISE) 2025, which assessed the bank’s operations and financial position as of March 31, 2025.

During the supervisory review, RBI observed that Canara Bank had not uploaded the KYC records of certain customers to the Central KYC Records Registry (CKYCR) within the stipulated timeframe prescribed under regulatory guidelines. The CKYCR system plays a critical role in maintaining centralized customer identification records and ensuring compliance across the banking sector.

The regulator also identified issues relating to account classification practices. It found that the bank had marked some customer accounts as inoperative, even though the most recent customer-initiated transaction in those accounts had occurred less than one year earlier. Such classification was inconsistent with the applicable regulatory framework governing dormant and inactive accounts.

In a separate enforcement action, the RBI imposed a penalty of ₹3.1 lakh on Puran Associates Private Limited for non-compliance with certain provisions of the central bank’s directions concerning asset classification norms.

The RBI clarified that both penalties were imposed solely on account of deficiencies in regulatory compliance. The actions should not be interpreted as questioning the validity of any transactions, agreements, or arrangements entered into by the entities with their customers.

The latest enforcement measures underscore the RBI’s continued emphasis on strengthening compliance standards, customer protection mechanisms, and adherence to banking and financial regulations across the sector.

Short Summary

The RBI has levied a ₹41.8 lakh penalty on Canara Bank for lapses related to KYC record uploads and incorrect classification of certain customer accounts as inoperative. Separately, Puran Associates Pvt Ltd was fined ₹3.1 lakh for non-compliance with RBI’s asset classification guidelines.