The Reserve Bank of India (RBI) has reassured markets that there is no systemic issue arising from a ₹590 crore fraud uncovered at a branch of IDFC First Bank, Governor Sanjay Malhotra said on Monday.
The fraud, disclosed by the private lender, involved alleged collusion between certain employees and external parties in Haryana government-linked accounts at the bank’s Chandigarh branch. RBI emphasised that it is closely “watching developments” but sees the matter as isolated and not indicative of broader financial system instability.
Following the disclosure, the Haryana government de-empanelled IDFC First Bank and AU Small Finance Bank for state government business, prompting operational changes and prompting the bank to initiate investigations and a forensic audit.
The bank has suspended four employees suspected of involvement while pursuing legal and disciplinary action to recover funds. Despite the setback, regulators and management maintain confidence in the bank’s capital adequacy and overall stability.
