IDFC First Bank Reports Rs 590 Crore Fraud; RBI Sees No Systemic Risk

IDFC First Bank disclosed a Rs 590 crore fraud at its Chandigarh branch involving unauthorized transactions linked to Haryana government accounts, allegedly due to employee collusion with external parties. The bank suspended four officials, initiated a forensic audit by KPMG, and filed police complaints. The Haryana government de-empanelled the bank for government business and ordered a probe by the Anti-Corruption Bureau. RBI Governor Sanjay Malhotra stated there is no systemic risk to the banking sector. The fraud triggered a sharp 16-20% fall in the bank's shares, erasing significant market value and impacting major shareholders including the government and LIC. The bank plans to strengthen controls on high-value transactions to prevent future incidents.