Mumbai: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 41.8 lakh on Canara Bank for non-compliance with certain regulatory provisions, including norms related to Know Your Customer (KYC) requirements and account classification procedures.
The penalty was imposed following a supervisory evaluation conducted by the central bank, which identified deficiencies in the bank’s compliance with prescribed regulatory guidelines.
RBI finds lapses in KYC compliance
According to the RBI, the action was based on findings from the Supervisory Evaluation Process (ISE 2025) conducted with reference to the bank’s financial position as of March 31, 2025.
During the review, the central bank found that Canara Bank had failed to upload Know Your Customer (KYC) records of certain customers to the Central KYC Records Registry (CKYCR) within the stipulated time frame.
The CKYCR system has been established to maintain and share customer KYC records across regulated financial institutions, helping strengthen compliance and improve customer verification processes.
The RBI observed that delays in uploading customer records amounted to a violation of regulatory instructions issued to banks.
Inoperative account classification also cited
The central bank also identified irregularities in the classification of certain customer accounts.
According to RBI findings, the bank classified some accounts as inoperative even though the last customer-induced transaction in those accounts had occurred less than one year earlier.
Banking regulations prescribe specific criteria and timelines before accounts can be designated as inoperative, and the RBI concluded that the bank had not adhered to these requirements in certain cases.
Based on these observations, the regulator decided to impose the monetary penalty.
Separate penalty on finance company
In a separate action, the RBI imposed 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 said the company had failed to comply with specific directions governing the classification of assets under applicable RBI regulations.
Details regarding the specific transactions involved were not disclosed by the central bank.
RBI clarifies nature of penalties
The RBI emphasised that both penalties were imposed solely on account of deficiencies in regulatory compliance.
The central bank clarified that the action should not be interpreted as a comment on the validity of any transactions or agreements entered into by the entities with their customers.
According to the regulator, the penalties are intended to ensure adherence to prescribed norms and strengthen compliance standards across regulated institutions.
Focus on regulatory compliance
The latest action reflects the RBI’s continued focus on ensuring that banks and financial institutions comply with regulatory requirements relating to customer verification, account management and asset classification.
Financial institutions are required to maintain robust compliance systems and adhere to timelines prescribed under various regulatory frameworks to safeguard customer interests and maintain the integrity of the banking system.
The RBI regularly conducts supervisory assessments and inspections of regulated entities and takes corrective action whenever violations or deficiencies are identified.