Karnataka Bank Reports Rs 18.57 Crore Loss Due to Reconciliation Issues in UPI Transactions
Karnataka Bank Ltd, a private sector lender, has identified deficiencies in its reconciliation process for cross-border Unified Payments Interface (UPI) transactions, resulting in an estimated net loss of ₹18.57 crore after an immediate recovery. The bank disclosed this issue in a regulatory filing on the National Stock Exchange (NSE) on February 17, 2025.
Issue Identified During Review of UPI Global Transactions
During a review of suspicious UPI Global transactions, Karnataka Bank found that certain reconciliation processes were not functioning correctly. The issue was linked to the reversal of transaction amounts to customers, which led to financial discrepancies. However, the bank clarified that the problem does not affect its daily operations or customer services.
Bank Notifies RBI, Takes Preventive Measures
The bank has reported the matter to the Reserve Bank of India (RBI) and has started efforts to recover the lost amount. Additionally, Karnataka Bank has introduced enhanced control measures to strengthen its reconciliation processes and prevent similar incidents in the future.
Financial Performance Affected
In the quarter ending December 2024, Karnataka Bank reported a net profit of ₹283.6 crore, marking a 14.3% decline from ₹331 crore in the same period the previous year. The net interest income (NII) for the quarter also fell by 4.2%, standing at ₹792.8 crore compared to ₹827.6 crore a year earlier.
Despite the financial setback, the bank reassured its customers and stakeholders that corrective actions have been taken to address the issue and ensure better financial controls going forward.
