Karnataka Bank Flags ₹18.57 Crore Loss Due to Cross-Border UPI Reconciliation Issue, Reports to RBI

Karnataka Bank Ltd has identified deficiencies in its reconciliation process for cross-border UPI transactions, leading to an estimated net loss of ₹18.57 crore after immediate recovery. The issue was discovered during a review of suspicious UPI Global transactions, but the bank assured that its operations and customer services remain unaffected.

The loss resulted from the reversal of transaction amounts to customers. Karnataka Bank reported the matter to the Reserve Bank of India (RBI) on February 17, 2025, and has taken steps to recover the lost amount while implementing stricter control measures to prevent similar incidents in the future. In its financial performance for Q3 FY24, the bank recorded a net profit of ₹283.6 crore, reflecting a 14.3% decline from ₹331 crore in the same period the previous year. Additionally, its net interest income (NII) dropped 4.2% to ₹792.8 crore. To mitigate future risks, Karnataka Bank has introduced enhanced safeguards and reconciliation processes.

Karnataka Bank Flags ₹18.57 Crore Loss Due to Cross-Border UPI Reconciliation Issue, Reports to RBI

Karnataka Bank Ltd has identified a reconciliation issue related to cross-border UPI transactions, leading to an estimated loss of ₹18.57 crore after immediate recovery. In a regulatory filing on February 17, 2025, the private sector lender stated that the issue stemmed from the reversal of transaction amounts to customers. However, the bank assured that its operations and customer services remain unaffected.

The bank has reported the matter to the Reserve Bank of India (RBI) and is taking necessary steps to recover the lost amount while strengthening control measures to prevent similar incidents in the future.

For the quarter ending December 2024, Karnataka Bank posted a net profit of ₹283.6 crore, marking a 14.3% decline from the ₹331 crore reported in the same period last year. Its net interest income (NII) stood at ₹792.8 crore, down 4.2% from ₹827.6 crore a year earlier.

Shares of Karnataka Bank Ltd closed at ₹173.95 on the BSE, reflecting a decline of ₹2.55 or 1.44%.

Karnataka Bank has requested the Reserve Bank of India (RBI) to reverse a suspicious cross-border UPI transaction amounting to ₹18.87 crore. During a review of UPI Global transactions, the bank identified discrepancies in its reconciliation process.

Karnataka Bank Ltd, a private sector lender, has identified shortcomings in its reconciliation process for cross-border Unified Payments Interface (UPI) transactions, resulting in an estimated net loss of ₹18.57 crore after immediate recovery.

In a regulatory filing with the National Stock Exchange (NSE), the bank stated that a review of suspicious UPI Global transactions revealed deficiencies in the reconciliation process. However, it assured that the issue does not affect its operations or customer services. The problem arose due to the reversal of transaction amounts to customers.

Karnataka Bank reported the matter to the Reserve Bank of India (RBI) on February 17, 2025, and has taken measures to recover the lost funds. Additionally, it has implemented stricter control mechanisms to prevent similar issues in the future.

For the quarter ending December 2024, the bank posted a net profit of ₹283.6 crore, marking a 14.3% decline from ₹331 crore recorded in the same period the previous year. Its net interest income (NII) for the quarter was ₹792.8 crore, down 4.2% from ₹827.6 crore a year earlier.

On February 17, Karnataka Bank confirmed the reconciliation issue in its cross-border UPI transactions, leading to the estimated loss.