Karnataka Bank flags ₹18.57 crore loss from UPI reconciliation issue, reports to RBI

Private sector lender Karnataka Bank Ltd on Monday (February 17) said it has identified deficiencies in its reconciliation process for cross-border UPI transactions, resulting in an estimated loss of ₹18.57 crore, net of immediate recovery.

“…we inform that the Bank, during the course of its review of suspicious UPI Global transactions has identified certain deficiencies in the reconciliation process. The bank confirms that owing to this, there is no impact on the operations of the Bank nor on customer servicing,” Karnataka Bank said in a regulatory filing.

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The bank stated that the issue arose from the reversal of transaction amounts to customers but assured that its operations and customer services remain unaffected. The matter has been reported to the Reserve Bank of India (RBI) on February 17, 2025. Karnataka Bank has initiated steps to recover the lost amount and implemented additional controls to prevent recurrence.

“The bank will initiate necessary actions towards recovery of the amount involved and has also put in place additional control processes to prevent recurrence,” Karnataka Bank added.

Karnataka Bank reported a net profit of ₹283.6 crore for the three months ended December 2024, representing a decline of 14.3% compared to last year. It reported a profit of ₹331 crore a year ago. The net interest income (NII) was at ₹792.8 crore for the quarter, 4.2% lower than ₹827.6 reported a year earlier.

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Shares of Karnataka Bank Ltd ended at ₹173.95, down by ₹2.55, or 1.44% on the BSE.