By NSB.News Desk
Sanjay Malhotra, Governor of the Reserve Bank of India, on February 23 addressed the ₹590-crore fraud disclosed by IDFC First Bank, stating that the central bank is closely monitoring the developments and that there is “no systemic issue” arising from the incident.
“We are watching the development. There is no systemic issue here,” Malhotra said, adding that banks remain well-capitalised. “Capital adequacy stands at 17%, against the regulatory requirement of 11.5%,” he noted, reassuring markets about the overall stability of the banking system.
Shares Remain Under Pressure
At 12:35 pm on February 23, IDFC First Bank shares were trading nearly 16% lower at ₹70.39 apiece, after falling as much as 20% during intraday trade.
The bank had disclosed on Sunday that a ₹590-crore fraud was committed by certain employees and others in accounts held by the Government of Haryana at a specific branch in Chandigarh. The lender has informed the banking regulator and filed a police complaint.
Financial Impact Estimates
Brokerage estimates suggest that the amount under reconciliation is equivalent to around 0.9% of the bank’s net worth and roughly 20% of its fiscal 2026 pre-tax profit.
UBS estimated the suspected amount at about 22% of IDFC First’s FY26 profit after tax, though it said the capital impact would likely be limited to around 1% of net worth.
Morgan Stanley pegged the potential hit to FY26 pre-tax profit at approximately 20%.
Jefferies said the lender would need to reassure investors that the issue had not spread to other clients and that it did not indicate a broader systemic weakness.
Forensic Audit Ordered
In its filing, the bank said prima facie unauthorised and fraudulent activities were carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana government accounts, potentially involving other entities or counterparties.
Four employees have been suspended pending investigation, and an independent forensic audit has been ordered. The bank has appointed KPMG to conduct the forensic review.
IDFC First Bank also said it may pursue recoveries, including from linked accounts held at other banks.
Haryana Government De-Empanels Two Banks
Meanwhile, the Government of Haryana has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect until further orders.
While the RBI has sought to calm concerns by emphasizing the absence of systemic risk, investors remain focused on the outcome of the forensic audit and the final financial impact on the bank.