A day after IDFC FIRST Bank disclosed a ₹590-crore fraud involving accounts linked to the Haryana government, Sanjay Malhotra, Governor of the Reserve Bank of India (RBI), said the central bank is closely monitoring the situation and there is “no systemic issue” affecting the broader banking system.
Speaking to reporters after the customary post-Budget meeting of the RBI’s central board of directors, the governor stated that while the central bank does not comment on individual banks or regulated entities, it is keeping watch on developments. He emphasized that the incident does not pose any risk to the stability of the financial system.
The fraud, disclosed by the bank on Sunday, allegedly involved certain employees and other individuals connected to a specific branch in Chandigarh. According to the bank’s statement, “unauthorized and fraudulent activities” were carried out in a set of Haryana state government accounts and may have involved other entities or counterparties.
The issue reportedly came to light after a Haryana government department requested closure of its account and transfer of funds to another bank. During the process, discrepancies were observed between the balances recorded in the bank’s system and the figures provided by the government department. Subsequently, from February 18 onwards, other Haryana government entities also engaged with the bank regarding their accounts, during which further inconsistencies were detected.
IDFC FIRST Bank said it has informed the RBI about the matter and filed a police complaint. The bank has initiated an internal investigation to determine the extent of the fraud and identify those responsible.
In a conference call with analysts, Managing Director and CEO V. Vaidyanathan assured stakeholders that the bank would take strict action. He stated that the institution would “spare no one” and would thoroughly investigate every possible angle to uncover any employee involvement. He added that the bank is moving swiftly to contain the situation and strengthen internal controls.
The disclosure triggered a sharp reaction in the stock market. Shares of IDFC FIRST Bank fell 10 percent at the opening bell on Monday, dropping to ₹75.21. The decline deepened during the trading session, with the stock trading over 16 percent lower at ₹69.97 on the NSE by mid-afternoon.
Market participants said the steep fall reflected investor concerns over governance lapses and potential financial impact. However, the RBI’s assurance that there is no systemic threat helped calm broader market sentiment.
The incident has once again highlighted the importance of robust internal controls, particularly in accounts involving government entities. Analysts expect the bank to review its operational and compliance mechanisms to prevent recurrence.
While the financial hit and reputational damage remain key concerns for IDFC FIRST Bank, regulators have indicated that the issue appears isolated. Further clarity is expected as investigations proceed and the bank discloses additional details.
For now, the RBI’s message remains clear: the matter is under watch, and there is no indication of wider instability in the banking sector.
