'No Systemic Issues...': RBI Governor Assures Investors Amid IDFC First Bank Fraud Case

IDFC First Bank dominated the headlines in markets on Monday after the bank disclosed a Rs 590 crore fraud linked to the Haryana government account at one of its Chandigarh branches. The stock has tanked more than 15% on account of the fraud, leaving many investors confused over the lender's accountability.

However, IDFC First Bank has received some indirect support from the Reserve Bank of India, with the governor recently hinting that there is no systemic issue within the banking ecosystem.

Speaking at the customary post-budget meeting of the Central Board of Directors of RBI, Governor Sanjay Malhotra was asked about the IDFC First Bank situation.

In response, the RBI governor offered a diplomatic answer but added that there is no systemic issue. 

ALSO READ: IDFC First Bank Alleged Fraud: Brokerage Downplays Impact As 'Operational Risk'

"We do not comment on individual banks. There is no systemic issue," he said.

The RBI's governor's statement comes at a time when investor confidence in IDBI First Bank has been momentarily hurt due to the reported fraud amounting to Rs 590 crore.

However, brokerages, including Ashika, have played down the impact of the fraud on IDBI First Bank's balance sheets, even if the lender was to assume the full brunt of the Rs 590 crore fraud.

Meanwhile, the bank's management, in a conference call earlier today, clarified to investors while revealing that a few of its employees colluded to commit the fraud, which it calls 'the most textbook one' in the banking industry.

IDFC First Bank's CEO V Vaidyanathan also warned that 'no one will be spared' as the lender appointed KPMG to conduct an independent audit.

ALSO READ: IDFC First Bank Fraud: 'Old-School Forgery, Staff Collusion' — CEO Vows 'No One Will Be Spared'

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