Reserve Bank of India Governor Sanjay Malhotra on Monday, 23 February 2026, stated there is no systemic issue following the disclosure of a ₹590 crore fraud at IDFC First Bank.
The fraud, involving certain employees and Haryana government accounts at the bank’s Chandigarh branch, led to immediate regulatory and market responses. Four officials were suspended, a forensic audit was initiated, and the Haryana government de-empanelled the bank for state business.
According to The Indian Express, Governor Malhotra clarified that the RBI is closely monitoring the situation but does not see any risk to the broader banking system. He emphasised, “We are watching the developments. There is no systemic issue,” during a post-Budget meeting with the central board of directors.
As reported by Financial Express, IDFC First Bank’s Managing Director and CEO V Vaidyanathan described the fraud as a result of collusion between employees and external parties, confined to a specific set of Haryana government-linked accounts. The bank has filed police complaints, informed regulators, and appointed KPMG for an independent forensic audit expected to conclude within four to five weeks.
As highlighted by Deccan Herald, the bank stressed that the fraudulent activity was limited to one branch and did not affect other customers. The RBI Governor reiterated that the incident does not indicate a wider problem in the banking sector.
“We do not comment on any individual bank or regulated entity. We are watching the developments. There is no systemic issue,” Governor Sanjay Malhotra stated.
Market reaction was swift, with IDFC First Bank shares falling nearly 20% on the day of the disclosure. Analysts noted that while the fraud amount is significant relative to the bank’s quarterly profit, the bank maintains that the impact is limited to about 1% of its net worth.
In the middle of the trading session, coverage revealed that the Haryana government also de-empanelled AU Small Finance Bank for unrelated reasons, but the focus remained on IDFC First Bank due to the scale and nature of the fraud.
Further details emerged that the suspected fraud at IDFC First Bank represents approximately 0.9% of its net worth, and Haryana government accounts constitute about 0.5% of the bank’s total deposits. The bank has initiated recovery steps and is cooperating with authorities.
“We will spare no one and will get to the bottom of the fraud. We will move diligently and very fast… we will scan every nook and corner to see any employees are involved,” CEO V Vaidyanathan said.
In the context of sector governance, analysis showed that such incidents, while isolated, highlight ongoing challenges with internal controls and governance in Indian banks, despite strengthened regulatory oversight in recent years.
Additional information indicated that the bank’s board has been actively involved in monitoring the situation, and the institution remains well-capitalised with profitability on a positive trajectory, according to management statements.
Note: This article is produced using AI-assisted tools and is based on publicly available information. It has been reviewed by The Quint's editorial team before publishing.