RBI Governor Says IDFC First Bank Fraud Probe Poses No Systemic Risk

RBI Governor Sanjay Malhotra downplayed concerns regarding a fresh fraud probe at IDFC First Bank on February 23. He stated that the developments posed “no systemic risk” to the Indian banking sector.

The remarks came as the central bank continued monitoring the situation without commenting on specifics of the ongoing investigation. The case has triggered sharp market reactions and renewed attention on lender‑level controls and regulatory oversight.

RBI Clarifies Position on IDFC First Bank Probe

Sanjay Malhotra reaffirmed the RBI’s long-standing policy of not commenting on individual regulated entities. He noted that the central bank is tracking developments related to the fraud investigation at IDFC First Bank.

Malhotra emphasised that the case does not threaten the broader stability of India’s financial system. He explained that the incident appears isolated and does not reflect systemic vulnerabilities across the banking sector.

Background To the Fraud Investigation

The developments follow an ongoing fraud probe at IDFC First Bank that began in 2025. The case centres on alleged loan irregularities exceeding ₹1,000 crore, prompting heightened scrutiny from regulators and investors.

Market reaction was swift, with the stock falling as much as 20% intraday amid heavy trading turnover. Nearly ₹1,400 crore worth of shares changed hands on the day, underscoring the magnitude of investor concern.

Government And RBI’s Joint Media Interaction

Malhotra and Finance Minister Nirmala Sitharaman addressed the media after the post‑Budget meeting. During the briefing, they discussed issues including the fraud case, foreign investment inflows and ongoing trade negotiations.

The briefing also touched upon updates related to the central bank digital currency. Both officials stressed that the banking system remains resilient and well capitalised despite isolated incidents of fraud.

Bank Management’s Response and Audit Measures

Earlier in the day, IDFC First Bank’s management said that the incident was confined to a single branch and one customer. The bank stated that internal checks and monitoring systems remain functional and that corrective actions are underway.

As part of its response, the lender has appointed KPMG to conduct an independent forensic audit of the matter. The bank reaffirmed that its internal processes and governance framework continue to operate as intended.

IDFC First Bank Share Price Performance

On February 23, 2026, IDFC First Bank share price opened at ₹75.16, compared to the previous close of ₹83.51. During the session, as of 2:11 PM IST, the stock had touched a high of ₹75.16 and a low of ₹66.80, and was trading at ₹70.27, down by 15.85%.

The stock recorded a traded volume of 5,771.40 lakh shares and a traded value of ₹3,972.46 crore on the NSE. The market capitalisation stood at ₹60,306.13 crore.

Read More: IDFC First Bank Share Price in Focus After ₹590 Crore Fraud.

Conclusion

RBI Governor Sanjay Malhotra’s remarks signal confidence in the broader health of the Indian banking system amid the latest developments at IDFC First Bank. The fraud investigation, which began in 2025, continues with external oversight and a forensic audit by KPMG. Market volatility has followed the disclosure, but regulators view the case as contained within the institution. The bank’s shareholding structure and governance measures remain key focus areas as the investigation progresses.

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