Karnataka Bank was incorporated on 18 February 1924, and commenced business on 23 May 1924. Its founders established it at Mangalore, a coastal town in the Dakshina Kannada district of Karnataka. Among the founders, who created the bank to serve the South Kanara region, was B. R. Vysaray Achar. Another important personality associated with the bank was K. S. N. Adiga, who served as Chairman from 1958 to 1979.
In the 1960s Karnataka Bank acquired three smaller banks. In 1960 Karnataka Bank acquired the Sringeri Sharada Bank, which was established in 1942 and which had four branches when Karnataka acquired it. Four years later, Karnataka Bank took over the assets and liabilities of the Chitradurga Bank (also known as Chitladurg Bank), which was established in 1868 in Mysore Stateand was the oldest bank in Mysore. Lastly, in 1966 Karnataka Bank took over the assets and liabilities of the Bank of Karnataka, in Hubli. Bank of Karnataka had been established in 1946 and had opened one branch in Belgaum in 1947. At the time of this acquisition, Bank of Karnataka had 13 branches.

Today, Karnataka Bank currently has a network of 765 branches and above 1334 ATM's across 21 states and two Union territories. It has over 7600 employees and 6.7 million customers, including farmers and artisans in villages and small towns throughout the country. Its shares are entirely privately owned by some 1,29,862 shareholders. The tag line of the bank is ”FAMILY BANK ACROSS INDIA". It is based in the coastal city of Mangaluru in Karnataka, India. The Reserve Bank of India has designated Karnataka Bank as an A1+ class scheduled commercial bank. The branches are available in 21 Indian states and 2 union territories. In August 2008,the Karnataka Bank introduced Quick Remit, a facility to make money transfer easy for Non-Resident Indians living in Canada, United States and the UK. The bank also runs a 24-hour Internet banking service called Moneyclick.
Karnataka Bank offers multi-branch banking, deposit schemes as Abhyudaya cash certificate, fixed deposits, ready money deposit, Soulabhya deposit, cumulative deposit, Platinum lakhpathi, insurance linked savings bank deposit, K-Flexi deposit, resident foreign currency (domestic) account, NRI services, Senior Citizens Deposit Scheme and loan schemes as Vidyanidhi education loans, Apna ghar home loans, car finance scheme, Varthak loans, Easy ride, Scheme for salaried persons, Udyog mithra, Niveshan loans, Krishi card, K-Power, Lease ‘n’ Encash, Suvarna Nidhi, InstaCash and VahanaMitra.