A Karnataka Bank employee accidentally transferred ₹1 lakh crore in a ‘fat finger error’, nearly wiping out deposits. The funds were recovered within hours, but the RBI has sought an explanation over delays in reporting and internal lapses.
Bengaluru: In an astonishing case of human error, a routine transaction at KarnatakaBank nearly turned into a financial catastrophe when an employee accidentally transferred a staggering ₹1 lakh crore, the equivalent of the bank’s entire deposit base, to another account. The Mangaluru-headquartered private sector bank, which prides itself on meticulous operations and rigorous checks, narrowly avoided a major crisis thanks to a timely recovery. The incident has raised serious questions about digital oversight and internal controls within the banking system.
Fat Finger Error Leads to Massive Transfer
According to a Moneycontrol report, the blunder occurred when a Karnataka Bank employee made an erroneous entry during a fund transfer process, resulting in ₹1 lakh crore being credited to another account.
In financial terminology, such a blunder is known as a fat finger error, an unintentional input mistake caused by pressing the wrong key or entering incorrect data during a transaction.
The sum, comprising customer deposits and internal funds, was transferred in a single stroke, almost shaking the very foundations of the 100-year-old bank.
The ₹1 Lakh Crore Mistake and Recovery
The incident took place on 8 August 2023 at 5:17 pm. Fortunately, the funds were transferred to an inactive account, which prevented any misuse.
Realising the gravity of the situation, Karnataka Bank’s operations team immediately swung into action. After nearly three hours of effort, the entire amount was successfully retrieved by 8:09 pm the same evening.
While the crisis was averted, the episode highlighted the potential risks that even a momentary lapse could cause in high-value banking transactions.
RBI Seeks Answers, Questions Delay in Reporting
The Reserve Bank of India (RBI) reportedly expressed strong displeasure over the incident and questioned whether the transfer was purely accidental or indicative of deeper procedural lapses.
Although the erroneous transfer occurred in August 2023, Karnataka Bank’s risk management team was asked to submit a detailed report only by 11 March 2024. The IT department followed up with its findings on 15 March, and a PowerPoint presentation explaining the sequence of events was made on 28 March 2024.
The RBI, however, was reportedly unhappy with both the delay in the corrective response and the omission of the incident in the audit report.
Bank’s Reputation and the Larger Lesson
Karnataka Bank, which operates nearly 1,000 branches across India, has long been regarded as one of the country’s most reliable mid-sized private sector banks. Its quick recovery from the mishap prevented reputational damage, but the episode serves as a reminder of the importance of stronger automation controls, real-time monitoring, and continuous employee training in banking operations.