diff --git a/android/navi-pay/src/main/kotlin/com/navi/pay/common/usecase/LiteAccountSyncUseCase.kt b/android/navi-pay/src/main/kotlin/com/navi/pay/common/usecase/LiteAccountSyncUseCase.kt
index 0f4961fc7f..24ab396bc8 100644
--- a/android/navi-pay/src/main/kotlin/com/navi/pay/common/usecase/LiteAccountSyncUseCase.kt
+++ b/android/navi-pay/src/main/kotlin/com/navi/pay/common/usecase/LiteAccountSyncUseCase.kt
@@ -43,6 +43,7 @@ import com.navi.pay.onboarding.account.common.repository.AccountsRepository
 import com.navi.pay.onboarding.account.detail.model.view.LinkedAccountEntity
 import com.navi.pay.onboarding.binding.model.view.NaviPayCustomerOnboardingEntity
 import com.navi.pay.utils.KEY_UPI_LITE_ACTIVE_ACCOUNT_INFO
+import com.navi.pay.utils.LRN_MISMATCH_ERROR
 import com.navi.pay.utils.UPI_LITE_DEREGISTRATION
 import com.navi.pay.utils.UPI_LITE_TOPUP
 import com.navi.pay.utils.getFormattedAmountWithDecimal
@@ -72,6 +73,7 @@ constructor(
     private val naviCacheRepository: NaviCacheRepository,
     private val naviPayCustomerStatusHandler: NaviPayCustomerStatusHandler,
     private val upiRequestIdUseCase: UpiRequestIdUseCase,
+    private val accountsRepository: AccountsRepository,
 ) {
 
     private val INITIAL_TOPUP_POLLING_INTERVAL = 5.seconds
@@ -627,6 +629,7 @@ constructor(
                     selectedBankAccount = linkedAccountEntity,
                     lrn = lrn,
                     customerOnboardingEntity = customerOnboardingEntity,
+                    pspType = pspType,
                 )
             }
             else -> {}
@@ -639,6 +642,7 @@ constructor(
         selectedBankAccount: LinkedAccountEntity,
         lrn: String?,
         customerOnboardingEntity: NaviPayCustomerOnboardingEntity,
+        pspType: PspType,
     ) {
         naviPayAnalytics.onDevGenericEvent(
             event = "LiteAccountSyncUseCase_onClSuccessCallback",
@@ -667,11 +671,46 @@ constructor(
             )
 
         if (liteRegistrationResponse.isSuccessWithData()) {
-            upiLiteClHelper.registerUpiLiteWithCl(
-                xmlPayLoad = liteRegistrationResponse.data!!.xmlPayload,
-                buid = buid,
-            )
-            checkIfClIsBoundUpdateBalance(buid = buid)
+            val isLrnDifferentFromRemoteLrn =
+                !lrn.isNullOrBlank() && lrn != liteRegistrationResponse.data?.lrn
+            if (isLrnDifferentFromRemoteLrn) {
+                /**
+                 * If the local lrn differs from the network LRN, mark the local lrn as DEREGISTERED
+                 * in the database and mark network lrn as PENDING_ACTIVATION.
+                 */
+                naviPayAnalytics.onDevGenericEvent(
+                    event = LRN_MISMATCH_ERROR,
+                    params =
+                        mapOf(
+                            "localLrn" to lrn.orEmpty(),
+                            "remoteLrn" to liteRegistrationResponse.data?.lrn.orEmpty(),
+                            "func" to "LiteAccountSyncUseCase.execute()",
+                        ),
+                )
+                accountsRepository.updateLiteAccountStatusByAccountIdAndLrn(
+                    upiLiteAccountStatus = UPILiteAccountStatus.DEREGISTERED,
+                    accountId = selectedBankAccount.accountId,
+                    lrn = lrn.orEmpty(),
+                    upiRequestId = upiRequestId,
+                )
+                accountsRepository.updateLiteInfoListAfterRegistrationByAccountIdAndStatus(
+                    lrn = liteRegistrationResponse.data?.lrn.orEmpty(),
+                    upiLiteAccountStatus = UPILiteAccountStatus.PENDING_ACTIVATION,
+                    initialTopUpStatus = InitialTopUpStatus.NOT_INITIATED,
+                    lastUpdatedOn = getDateTimeStringWithYearOffset(),
+                    accountId = selectedBankAccount.accountId,
+                    rotation = liteRegistrationResponse.data?.rotation.orEmpty(),
+                    deviceId = deviceInfoProvider.getDeviceData().deviceId,
+                    pspType = pspType,
+                )
+                naviCacheRepository.clear(KEY_UPI_LITE_ACTIVE_ACCOUNT_INFO)
+            } else {
+                upiLiteClHelper.registerUpiLiteWithCl(
+                    xmlPayLoad = liteRegistrationResponse.data!!.xmlPayload,
+                    buid = buid,
+                )
+                checkIfClIsBoundUpdateBalance(buid = buid)
+            }
         }
     }
 
diff --git a/android/navi-pay/src/main/kotlin/com/navi/pay/management/lite/viewmodel/UpiLiteViewModel.kt b/android/navi-pay/src/main/kotlin/com/navi/pay/management/lite/viewmodel/UpiLiteViewModel.kt
index 3b87dd7a97..077be11450 100644
--- a/android/navi-pay/src/main/kotlin/com/navi/pay/management/lite/viewmodel/UpiLiteViewModel.kt
+++ b/android/navi-pay/src/main/kotlin/com/navi/pay/management/lite/viewmodel/UpiLiteViewModel.kt
@@ -155,6 +155,7 @@ import com.navi.pay.utils.DEFAULT_UPI_MODE
 import com.navi.pay.utils.KEY_UPI_LITE_ACTIVE_ACCOUNT_INFO
 import com.navi.pay.utils.KEY_UPI_LITE_MANDATE_INFO
 import com.navi.pay.utils.LITE_MANDATE
+import com.navi.pay.utils.LRN_MISMATCH_ERROR
 import com.navi.pay.utils.MONEY_ADDED_TO_UPI_LITE
 import com.navi.pay.utils.NAVI_PAY_DEFAULT_MCC
 import com.navi.pay.utils.NAVI_PAY_PURPLE_CTA_LOADER_LOTTIE
@@ -3008,9 +3009,9 @@ constructor(
         }
 
         processLiteRegistrationResponse(
+            localLrn = lrn.orEmpty(),
             linkedAccountEntity = linkedAccountEntity,
             liteRegistrationResponse = liteRegistrationResponse.data!!,
-            lrn = lrn,
             upiRequestId = upiRequestId,
             shouldAutoInitTopUp = shouldAutoInitTopUp,
             initCreateAndExecuteMandate = initCreateAndExecuteMandate,
@@ -3052,14 +3053,42 @@ constructor(
     }
 
     private suspend fun processLiteRegistrationResponse(
+        localLrn: String,
         linkedAccountEntity: LinkedAccountEntity,
         liteRegistrationResponse: LiteRegistrationResponse,
-        lrn: String?,
         upiRequestId: String,
         shouldAutoInitTopUp: Boolean,
         initCreateAndExecuteMandate: Boolean,
         pspType: PspType,
     ) {
+        /**
+         * If the local lrn differs from the network LRN, mark the local lrn as DEREGISTERED in the
+         * database.
+         */
+        if (localLrn.isNotBlank() && localLrn != liteRegistrationResponse.lrn) {
+            naviPayAnalytics.onDevGenericEvent(
+                event = LRN_MISMATCH_ERROR,
+                params =
+                    mapOf(
+                        "localLrn" to localLrn,
+                        "remoteLrn" to liteRegistrationResponse.lrn,
+                        "func" to "UpiLiteViewmodel.processLiteRegistrationResponse()",
+                    ),
+            )
+            accountsRepository.updateLiteAccountStatusByAccountIdAndLrn(
+                upiLiteAccountStatus = UPILiteAccountStatus.DEREGISTERED,
+                accountId = linkedAccountEntity.accountId,
+                lrn = localLrn,
+                upiRequestId = upiRequestId,
+            )
+            handleRegistrationFailedCase(
+                liteRegistrationResponse = liteRegistrationResponse,
+                linkedAccountEntity = linkedAccountEntity,
+                pspType = pspType,
+            )
+            return
+        }
+
         val clRegistration =
             upiLiteClHelper.registerUpiLiteWithCl(
                 xmlPayLoad = liteRegistrationResponse.xmlPayload,
@@ -3078,7 +3107,7 @@ constructor(
         // Lite registration is successful
         handleRegistrationSuccessCase(
             linkedAccountEntity = linkedAccountEntity,
-            lrn = lrn,
+            lrn = liteRegistrationResponse.lrn,
             liteRegistrationResponse = liteRegistrationResponse,
             upiRequestId = upiRequestId,
             initCreateAndExecuteMandate = initCreateAndExecuteMandate,
diff --git a/android/navi-pay/src/main/kotlin/com/navi/pay/onboarding/account/common/repository/AccountsRepository.kt b/android/navi-pay/src/main/kotlin/com/navi/pay/onboarding/account/common/repository/AccountsRepository.kt
index 487814ea43..134d4052f3 100644
--- a/android/navi-pay/src/main/kotlin/com/navi/pay/onboarding/account/common/repository/AccountsRepository.kt
+++ b/android/navi-pay/src/main/kotlin/com/navi/pay/onboarding/account/common/repository/AccountsRepository.kt
@@ -181,6 +181,39 @@ constructor(
             }
     }
 
+    suspend fun updateLiteAccountStatusByAccountIdAndLrn(
+        upiLiteAccountStatus: UPILiteAccountStatus,
+        accountId: String,
+        lrn: String,
+        upiRequestId: String?,
+    ) {
+        val activeAccountsForAccountId =
+            accountDao.getAccountByAccountIdAndStatus(
+                accountId = accountId,
+                status = AccountStatus.ACTIVE,
+            )
+
+        val upiLiteInfoList = activeAccountsForAccountId.upiLiteInfo.toMutableList()
+
+        // Updating the account status for the lrn
+        upiLiteInfoList
+            .indexOfFirst { it.lrn == lrn }
+            .let {
+                if (it != -1) {
+                    upiLiteInfoList[it] =
+                        upiLiteInfoList[it].copy(
+                            accountStatus = upiLiteAccountStatus,
+                            initialTopUpUpiRequestId = upiRequestId ?: "",
+                        )
+                    accountDao.updateLiteInfoListByAccountIdAndStatus(
+                        accountId = accountId,
+                        accountStatus = AccountStatus.ACTIVE,
+                        upiLiteInfo = upiLiteInfoList,
+                    )
+                }
+            }
+    }
+
     suspend fun updateLiteAccountStatusAndDeregistrationUpiRequestIdByAccountIdAndLrn(
         upiLiteAccountStatus: UPILiteAccountStatus,
         accountId: String,
diff --git a/android/navi-pay/src/main/kotlin/com/navi/pay/utils/NaviPayConstants.kt b/android/navi-pay/src/main/kotlin/com/navi/pay/utils/NaviPayConstants.kt
index 2e37ec0f95..342196005e 100644
--- a/android/navi-pay/src/main/kotlin/com/navi/pay/utils/NaviPayConstants.kt
+++ b/android/navi-pay/src/main/kotlin/com/navi/pay/utils/NaviPayConstants.kt
@@ -608,3 +608,6 @@ const val GOLD_ROUND_OFF_AMOUNT = "Round-off amount"
 
 // External id error
 const val ERR_FAILED_TO_FETCH_EXTERNAL_CUSTOMER_ID = "ERR_FAILED_TO_FETCH_EXTERNAL_CUSTOMER_ID"
+
+// Lrn mismatch error
+const val LRN_MISMATCH_ERROR = "lrn_mismatch_error"