Watching developments in IDFC Bank fraud case, says RBI governor
What's the story
The Reserve Bank of India (RBI) is closely monitoring the recent ₹590 crore fraud case involving IDFC First Bank. The bank had reported the fraudulent activity, allegedly committed by some employees and others, at a specific branch in Chandigarh. "We are watching the development, there is no systemic issue," RBI Governor Sanjay Malhotra said during a press briefing after Finance Minister Nirmala Sitharaman's address to the Central Board of Directors of RBI today.
Fraud details
Fraud confined to specific group of government-linked accounts
IDFC First Bank clarified that the fraud is "confined to a specific group of government-linked accounts within Haryana government" operated through its Chandigarh branch. The bank has already reported the matter to the banking regulator and lodged a police complaint. Four employees have been suspended in connection with this case, and an independent forensic audit by KPMG has been initiated.
Financial implications
Brokerage estimates on suspected amount
The amount in question is equivalent to nearly 0.9% of the bank's net worth and nearly 20% of its FY2026 pre-tax profit, brokerage estimates show. UBS pegged the suspected amount at around 22% of IDFC's fiscal 2026 profit after tax but said the capital impact would be limited to roughly 1% of the bank's net worth. Morgan Stanley also estimated a potential hit to fiscal 2026 profit before tax at about 20%.
Suspension
Haryana government halts business with IDFC, AU Small Finance
In light of the fraud case, the Haryana government has suspended IDFC First Bank and AU Small Finance Bank from doing any government business until further notice. An official circular said no government funds will be parked, deposited, invested or transacted through these institutions. This comes as a major blow to both banks as they lose out on a significant chunk of their business operations.