IDFC First Bank's Rs 590-cr fraud: RBI Governor says incident poses 'no systemic risk'
The lender’s shares plunged 20% in early trade today after it reported a ₹590-crore fraud allegedly carried out by certain employees along with external parties in accounts linked to the Government of Haryana.
- Feb 23, 2026,
- Updated Feb 23, 2026 1:45 PM IST
Reserve Bank of India Governor Sanjay Malhotra sought to calm market jitters over a newly disclosed fraud at IDFC First Bank, stating that the incident carries “no systemic risk” to the country’s banking sector. Speaking amid heightened scrutiny, Malhotra emphasised that Indian banks remain well-capitalised and resilient.
“Banks have enough capital with them. Capital adequacy is 17% while the requirement is 11.5%,” he said on February 23, adding that the central bank is monitoring developments but would not comment on specifics of the lender’s internal probe.
The reassurance came as the bank’s shares plunged 20% in early trade after it reported a ₹590-crore fraud allegedly carried out by certain employees along with external parties in accounts linked to the Government of Haryana.
The stock fell to ₹66.85 from the previous close of ₹83.56, hitting the lower circuit limit and dragging the lender’s market capitalisation down to ₹58,259 crore.
Fraud linked to a specific branch
In a regulatory filing, the bank said the suspected irregularities were traced to a particular branch in Chandigarh involving a “specific set” of Haryana state government accounts and potentially other counterparties.
“Prima facie, unauthorised and fraudulent activities have been carried out by certain employees,” the filing noted.
The lender said four officials have been suspended pending investigation and added that it will pursue “strict disciplinary, civil and criminal action” against those responsible. To examine the matter independently, the bank has appointed KPMG to conduct a forensic audit.
Separately, the Haryana government has de-empanelled both the lender and AU Small Finance Bank from handling government business with immediate effect until further notice. An official circular stated that no government funds will be parked, deposited, invested, or transacted through the two institutions during this period.
Reserve Bank of India Governor Sanjay Malhotra sought to calm market jitters over a newly disclosed fraud at IDFC First Bank, stating that the incident carries “no systemic risk” to the country’s banking sector. Speaking amid heightened scrutiny, Malhotra emphasised that Indian banks remain well-capitalised and resilient.
“Banks have enough capital with them. Capital adequacy is 17% while the requirement is 11.5%,” he said on February 23, adding that the central bank is monitoring developments but would not comment on specifics of the lender’s internal probe.
The reassurance came as the bank’s shares plunged 20% in early trade after it reported a ₹590-crore fraud allegedly carried out by certain employees along with external parties in accounts linked to the Government of Haryana.
The stock fell to ₹66.85 from the previous close of ₹83.56, hitting the lower circuit limit and dragging the lender’s market capitalisation down to ₹58,259 crore.
Fraud linked to a specific branch
In a regulatory filing, the bank said the suspected irregularities were traced to a particular branch in Chandigarh involving a “specific set” of Haryana state government accounts and potentially other counterparties.
“Prima facie, unauthorised and fraudulent activities have been carried out by certain employees,” the filing noted.
The lender said four officials have been suspended pending investigation and added that it will pursue “strict disciplinary, civil and criminal action” against those responsible. To examine the matter independently, the bank has appointed KPMG to conduct a forensic audit.
Separately, the Haryana government has de-empanelled both the lender and AU Small Finance Bank from handling government business with immediate effect until further notice. An official circular stated that no government funds will be parked, deposited, invested, or transacted through the two institutions during this period.