IDFC Bank's Rs 590 Crore Fraud Not A 'Systemic Issue': RBI Governor Sanjay Malhotra

IDFC Bank Fraud Case: After the Rs 590 crore IDFC First Bank 'employee fraud' came to light, Sanjay Malhotra, Governor of Reserve Bank of India (RBI), said that India's apex bank was observing the developments, while noting that there was no systemic risk here.

“As a policy, we do not comment on any individual bank or regulated entity. We are watching the developments. There’s no systemic risk here,” Malhotra said.

IDFC First Bank MD & CEO V Vaidyanathan said, "This matter pertains to a particular branch in Chandigarh and is confined to a limited set of Haryana government-linked accounts. The main issue which we have observed here is that certain employees of this branch, most possibly in connivance with external parties, have fraudulently transferred these amounts to beneficiaries who had accounts out— outside of our bank."

Meanwhile, the private lender's stock price fell as much as 20% in trade on Monday to hit an intra-day low of Rs 66.85 per share.

During an analyst call held today, the bank’s management said, "This is an isolated case in the last 5 years, 7 years, we put up over 1,000 branches, you know, cumulatively maybe over 1,050 or 1,060. And, and, and, and we have really not seen any incident of this nature that has happened here."

Also Read: Institutional Portfolios Hit as IDFC First Wipes Out ₹14k Cr in 1 Day

The bank noted that the Rs 590 crore Chandigarh branch fraud linked case was the "most traditional kind of fraud."

The Mumbai-headquartered lender has no promoter holding as of the December quarter. On other hand, mutual funds control 10.9%, insurance companies 10.8%, and the government holds 7.75%. Retail investors, with authorized share capital of up to ₹2 lakh, hold 15.06%, with 27.9 lakh shareholders on its register.

As of 1:54 pm, IDFC First Bank shares were trading 15.71% lower at Rs 70.43 per share.