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RBI Governor Sanjay Malhotra said there is no systemic risk arising from IDFC First Bank’s Rs 590-crore fraud involving certain employees and Haryana government-linked accounts. The central bank is closely monitoring developments and emphasized that banks remain well-capitalised, with capital adequacy at 17%. Following the disclosure, IDFC First Bank shares fell sharply.
RBI Says No Systemic Risk After IDFC First Bank’s Rs 590 Crore Fraud
New Delhi: Reserve Bank of India (RBI) Governor Sanjay Malhotra has responded to the alleged ₹590 crore fraud case at IDFC First Bank. He stated that the RBI is monitoring the developments and does not currently see any systemic risk.
Addressing a joint press conference with Finance Minister Nirmala Sitharaman, Sanjay Malhotra said, “We are monitoring the developments; there is no systemic issue.” He also stated that banks have adequate capital. Currently, the capital adequacy ratio is 17 percent, while the minimum requirement is 11.5 percent.
Sensex, Nifty open higher; IDFC First Bank shares crash 10% on fraud allegations
IDFC First Bank shares saw a sharp decline after the case became public. At 12:35 pm on February 23, the bank's shares were trading at ₹70.39, down nearly 16 percent. Intraday, the shares fell by nearly 20 percent.
The bank disclosed on Sunday that irregularities totaling ₹590 crore (approximately $1.5 billion) were committed in Haryana government accounts by some of its employees and other individuals. The matter is reported to be linked to a branch in Chandigarh. According to the bank, preliminary investigations revealed that the fraud was limited to specific accounts linked to the Haryana government and did not impact other customers.
According to brokerage firms, this amount represents approximately 0.9 percent of the bank's total net worth and approximately 20 percent of its projected pre-tax profit for FY2026. UBS estimates the impact to be approximately 1 percent of the bank's net worth, while Morgan Stanley and Jefferies also estimate a limited impact on potential profits.
IDFC First Bank stated that four suspected officials have been suspended pending investigation. The bank has informed the regulator and filed a police complaint. Strict disciplinary, civil, and criminal action will be taken against the responsible employees and outsiders.
The bank stated that the actual impact will be clear after further investigation, verification of claims, and potential recovery. Currently, both the RBI and the bank are closely monitoring the matter.
