How a Rs 1,00,000 crore fat finger error at Karnataka Bank is drawing RBI’s attention
November 12, 2025
While the incident occurred on August 8, 2023, it was escalated to the bank’s board much later and has caught the regulator’s attention in the current year’s annual inspection.
A fat finger error committed at Karnataka Bank, which dates to August 2023, is now drawing much attention. Internally, the leadership team at Karnataka Bank is busy strengthening its processes as officials at the Reserve Bank of India question the bank over the lapse in controls and risk management. Highly placed sources aware of the development say the fat finger error is among the core issues that has caught the regulator’s attention in the current year’s ongoing annual supervision.
“Even though the incident occurred about two years ago, given the quantum involved and how it has been handled so far, it is drawing a lot of interest,” said a senior executive associated with the bank who did not want to be identified.
Key issue
According to documents accessed by Moneycontrol, the extent of error committed pertains to a single transaction amounting to Rs 1,00,000 crore. A dormant saving bank account was wrongly credited by Rs 1,00,000 crore on August 9, 2023, at 17:17 hours. The entry was reversed at 20:09 hours on the same day, roughly within three hours after the incident occurred.
Since funds were credited to a dormant account, there was no financial implication because of the incorrect transfer. However, the error was brought to fore by the bank’s risk management department to the risk management committee of the board, nearly after six months after it happened, on March 4, 2024.
Subsequently, documents reviewed by Moneycontrol indicate that on March 11, 2024, the risk management committee was “directed to place a detailed report for the ensuing Board meeting with the details as to what went wrong and steps taken to prevent the same”. The IT department of the bank submitted a detailed note on the incident to the board on March 15, 2024. Subsequently on March 28, 2024, the IT department made a PowerPoint presentation to the Board “as to what is unclaimed account, incident background, root cause analysis and action taken”. It is further revealed that the matter was taken up for discussion again on October 23, 2024, at a board meeting, suggesting that the issue remained unresolved from March 2024 – October 2024.
Sources say that an audit of the bank’s IT systems by a CISA expert or a Certified Information Systems Auditor was conducted to fix the cause of the fat finger error and take remedial actions.
This was done after the matter was escalated to the board.
It is gathered that about four or five senior executives were identified by the management and were asked to leave the bank as they were held responsible for the error.
“Since the issue remained unresolved in FY25, it is being closely looked into in the ongoing RBI inspection,” said one of the sources cited above.
Under regulator’s scanner
Sources indicate that the regulator is questioning the bank on the effectiveness of its internal control and systems and its risk management practices. “Had it not been a non-operative account, it could have had financial implications on the bank,” said an official who didn’t want to be named.
The regulator has also raised concerns on why there was a delay in escalating the fat finger issue to the management and subsequently to its board.
“With reference to the incident cited, without review or assessment of the dates, amounts, or other specific details mentioned therein, we wish to clarify that it may pertain to an earlier operational matter which was duly identified and resolved by the Bank in accordance with applicable guidelines. The issue was addressed comprehensively, and no financial loss was incurred. It was detected through our routine due diligence mechanisms and strong internal controls, which are designed to proactively identify and rectify such occurrences. Further, the matter was duly reported to the regulator during the previous reporting cycle, and no further action is pending in this regard,” a spokesperson for Karnataka Bank replied when asked for clarification on the issue.
Email sent to RBI seeking comments on the matter remained unanswered till publishing the article.
To be sure, Karnataka Bank’s total advances was Rs 76,541 crore in FY25 while its deposits stood at Rs 104,807 crore. The bank raised about Rs 600 crore of capital through qualified institutional placements issue in March 2024. It recently saw its MD & CEO, Srikrishnan H and an executive director, Sekhar Rao step down from their positions in July this year. According to news reports, the bank has witnessed an exodus of senior leadership executives post the MD’s resignation, especially those roped in after 2023.
[MoneyControl]
