RBI slaps Rs 41.80 lakh fine on Canara Bank
Mumbai, June 5
The Reserve Bank of India on Friday imposed a penalty of Rs 41.80 lakh on Canara Bank for not complying with certain provisions of directions issued by the central bank on 'Know Your Customer' and 'Unclaimed Deposits and Inoperative Accounts in banks'.
An inspection of Canara Bank carried out by the RBI revealed that the bank did not upload KYC records of certain customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline. Canara Bank also classified certain accounts as inoperative, despite the last customer-induced transaction being less than one year old in such accounts, according to a Reserve Bank statement.
This penalty has been imposed in exercise of powers conferred on the RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949, the RBI said.
The Statutory Inspection for Supervisory Evaluation (ISE 2025) of the bank was conducted by the RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with the provisions of RBI directions, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for its failure to comply with the said provisions of RBI directions.
After considering the bank's reply to the notice, additional submissions made by it, and oral submissions made during the personal hearing, the RBI found that the charges on non-compliance with KYC norms and inoperative accounts rules against the bank were sustained, warranting imposition of a monetary penalty, the statement added.
The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, the imposition of a monetary penalty is without prejudice to any other action that may be initiated by the RBI against the bank, as per the statement.
— IANS
Reader Comments
₹41.80 lakh is a small amount for a bank like Canara which has thousands of crores in deposits. The real issue is customer inconvenience. My mother had an account there and they misclassified it as inoperative just because she didn't do a transaction for 9 months. The fine should be much higher to set an example.
What surprises me is that this inspection was for 2025 financial position and it's only June now. RBI is being proactive in catching non-compliance. KYC norms are there to prevent money laundering and terrorism financing - banks need to take this seriously. Good to see regulatory action.
The fine is peanuts for a bank of this size! But the message is important - if banks don't follow KYC properly, our money is at risk. Also, unclaimed deposits being mishandled means someone's savings could be lost forever. RBI should also force banks to publicize unclaimed accounts so rightful owners can claim them.
Banks should focus on customer service instead of finding ways to classify accounts as inoperative. Many senior citizens have fixed deposits that auto-renew and they don't do transactions frequently. Classifying those as inoperative is unfair. RBI is right to fine them but also needs to review the rules for inoperative accounts.
Honestly, this is a good thing. RBI needs to keep all banks on their toes. Canara Bank is a respected institution but nobody is above the law. The KYC rules exist to protect us customers. If they can't even upload records to CKYCR on time, what else are they slacking on? Fine should have been higher though. 💰