RBI Sees No Systemic Risk in IDFC First Bank Fraud; Haryana De-Empanels Lender

The Reserve Bank of India (RBI) has stated that it does not see any systemic risk emerging from the ₹590-crore fraud detected at IDFC First Bank. 

Addressing a joint press conference with Finance Minister Nirmala Sitharaman, RBI Governor Sanjay Malhotra said the central bank is closely monitoring developments and emphasised that the issue remains confined to the bank, without broader implications for the financial system.

The assurance helped calm concerns around contagion risks in the banking sector after the lender’s stock plunged nearly 20%, marking its sharpest fall since March 2020.

Details of the Fraud

The private sector bank disclosed fraudulent activity involving approximately ₹590 crore in certain Haryana government-linked accounts at its Chandigarh branch. According to the bank’s regulatory filing, a preliminary internal review suggests the discrepancies are limited to a specific group of accounts and do not extend to other customers of the branch.

The total amount under reconciliation stands at around ₹590 crore. The final financial impact will depend on claim validation, recovery efforts, marking of liens on fraudulent beneficiary accounts held with other banks, and legal proceedings against involved parties.

Action Taken by the Bank

IDFC First Bank has initiated a comprehensive investigation and has placed four suspected officials under suspension pending inquiry. The bank stated it will pursue strict disciplinary, civil, and criminal action against both internal employees and any external individuals found responsible. It also plans to recover the funds through legal channels and other recovery mechanisms.

Haryana Government’s Response

Following the fraud revelation, Haryana’s Finance Department (Institutional Finance & Credit Control) has de-empanelled IDFC First Bank and AU Small Finance Bank for government operations with immediate effect. All state departments, boards, corporations, and public sector undertakings have been instructed to transfer funds to other authorised banks and close accounts until further notice.

IDFC First Bank Share Price Performance

On February 24, 2026, IDFC First Bank share price opened at ₹69.89. At 10:42 AM, the share price of IDFC First Bank was trading at ₹70.23, up by 0.27% on the NSE.

Also Read: IDFC First and AU SFB Barred from Haryana Govt Business in Wake of ₹590 Crore Fraud!

Conclusion

While the fraud has dented investor sentiment and triggered regulatory scrutiny, the RBI’s assurance that there is no systemic risk offers stability to the broader banking system. The focus now shifts to recovery efforts, accountability, and rebuilding institutional confidence.

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