RBI imposed Rs 41.80 lakh penalty on Canara Bank in December 2024 for KYC violations and improper account classification. The bank failed to upload customer KYC records to Central KYC Records Registry (CKYCR) within prescribed timelines and incorrectly classified accounts as inoperative despite recent customer transactions. Penalty imposed under Section 47A(1)(c) of Banking Regulation Act, 1949 following Statutory Inspection for Supervisory Evaluation (ISE 2025) based on March 31, 2025 financial position.

This penalty highlights RBI's strict enforcement of KYC and account classification norms under its supervisory framework. The Central KYC Records Registry (CKYCR) is a centralized database launched to reduce customer onboarding time and ensure standardized KYC across financial institutions. Banks must upload customer KYC data within specified timelines to enable seamless account opening across the banking system. The inoperative account classification error shows operational lapses - accounts should only be classified as inoperative after 12 months of no customer-induced transactions. RBI's ISE framework conducts comprehensive supervisory evaluations to assess banks' regulatory compliance, financial health, and risk management practices. The penalty under Section 47A(1)(c) of Banking Regulation Act, 1949 demonstrates RBI's regulatory teeth in enforcing compliance. This action reflects broader regulatory emphasis on customer protection, data integrity, and operational efficiency in banking operations. Such penalties serve as deterrents while maintaining that they don't invalidate customer transactions or agreements, focusing purely on regulatory compliance failures.