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The offer 'will not be able to cover the overall cost of hosting a large-scale sports event,' Malaysia's sports and youth ministry said in a statement.
The Commonwealth Games Federation has offered Malaysia 100 million pounds in supporting funds if it decides to take over as host, after Victoria pulled out last year citing ballooning costs.
The disciplinary breach occurred on Thursday night. The 22-year-old, who competes in the men's 73kg weight class, was caught by security personnel, who made a video of the lifter.
The future of the Games more broadly remains up in the air, with Canada's Alberta province also withdrawing its support for a bid for the 2030 event.
Gold Coast mayor Tom Tate told Australian media that the Gold Coast, which hosted the Games in 2018, had the infrastructure in place to put the event on.
Victoria Premier Dan Andrews said the cost of the Games, which were to have been held in four regional hubs, could blow out to more than A$7 billion ($4.8 billion) from a budgeted A$2.6 billion if they went ahead.
The 24-year-old Keralite is the third Indian after discus thrower Vikas Gowda and javelin thrower Neeraj Chopra to secure a top-three finish in the Diamond League.
Commonwealth Games champion Lakshya went down 21-13, 17-21, 13-21 to the second-seeded Vitidsarn.
The troiple jumper bagged a silver medal behind close friend Eldhose Paul at the 2022 Commonwealth Games in Birmingham
He decided to accept the employment offer from the RBI after the Kerala government made him wait for years for a job under the sports quota.