The Reserve Bank of India (RBI) stated that there is no systemic risk to the banking system following the disclosure of a Rs 590-crore fraud at IDFC First Bank’s Chandigarh branch. RBI Governor Sanjay Malhotra emphasized that the Central Bank does not provide comments on individual banks or regulated entities. He mentioned that the regulator is closely monitoring the situation but assured that there is no significant threat to financial stability.
Finance Minister Nirmala Sitharaman met with the RBI board, after which the central bank addressed the media. Governor Malhotra highlighted the robustness of India’s banking system, citing strong capital and liquidity levels. He noted that banks currently maintain a capital adequacy ratio of about 17 percent, ensuring their ability to meet capital requirements even without fresh capital infusion over the next five years.
In response to the fraud reports involving IDFC First Bank, Malhotra reiterated the RBI’s vigilance without commenting on specific institutions. The bank itself clarified that the fraud was limited to a specific set of Haryana government-related accounts at its Chandigarh branch. The institution promptly informed regulators, lodged a police complaint, and suspended four officials pending investigation.
Following the revelation, IDFC First Bank’s stock experienced a sharp decline, hitting a 20 percent lower circuit during early trading on Monday. Although the shares initially dropped by 10 percent, they later plummeted further. However, the stock managed to recover slightly, trading at Rs 70.40 apiece by 1:48 pm, marking a 15.70 percent decline for the day.
