RBI Rules Out Systemic Risk After ₹590 Crore Fraud at IDFC First Bank Chandigarh Branch

New Delhi, February 23: The Reserve Bank of India on Monday clarified that there is no systemic risk to the Indian banking system following the disclosure of a ₹590 crore fraud at the Chandigarh branch of IDFC First Bank. The central bank reiterated that it does not comment on individual banks or regulated entities but confirmed that it is closely monitoring the situation.

RBI Monitoring Situation, No Broader Financial Stability Concern​

Speaking at a joint press conference after the meeting of the central board of directors in the national capital, RBI Governor Sanjay Malhotra addressed concerns surrounding the fraud.

Responding to queries regarding the ₹590 crore fraud reported at IDFC First Bank, the governor stated that the regulator remains vigilant but sees no broader threat to financial stability.

He emphasized that the Reserve Bank does not comment on specific banks or regulated entities. However, he added that the situation is under watch and there is no systemic issue arising from the incident.

The briefing followed a meeting between Finance Minister Nirmala Sitharaman and the RBI board.

Indian Banking System Backed by Strong Capital and Liquidity​

Highlighting the overall strength of the financial system, the governor said India’s banking sector remains well capitalized and adequately liquid.

Banks currently maintain a capital adequacy ratio of around 17 percent, which he described as robust. He further stated that even if no fresh capital is infused over the next five years, banks would still be able to meet their capital requirements comfortably.

IDFC First Bank Fraud Details and Market Reaction​

In a stock exchange filing last week, IDFC First Bank stated that the fraud is confined to a specific set of accounts linked to the Haryana government at its Chandigarh branch. The bank informed regulators and filed a police complaint. Four officials have been suspended pending investigation.

Following the development, shares of the private sector lender came under pressure in the market. The stock fell 20 percent in early trading on Monday, touching an intraday low of ₹66.85. The shares had opened 10 percent lower before extending losses.

However, the stock later recovered partially. At around 1:48 pm, the shares were trading at ₹70.40 apiece, down 15.70 percent for the day.

The central bank’s reassurance on the absence of systemic risk provided clarity amid market volatility, even as the investigation into the fraud continues.