On Monday, February 23, 2026, Reserve Bank of India (RBI) Governor Sanjay Malhotra addressed the concerns regarding the ₹590-crore fraud reported by IDFC First Bank. Speaking to the media, he clarified that this incident is an isolated case and does not pose a “systemic issue” for the Indian banking sector. This reassurance came shortly after the bank’s stock price crashed by 20%, hitting the lower circuit limit on the stock exchanges.
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What exactly happened at the Chandigarh branch?
The trouble began on February 18, 2026, when a department of the Haryana government requested to close its accounts and transfer funds. During this process, a significant mismatch was found in the account balances. The bank discovered that unauthorized transactions had occurred at its Chandigarh branch, leading to a loss of approximately ₹590 crore.
Following this discovery, the bank’s Special Committee and Audit Committee met to review the internal findings. To get to the bottom of the issue, the bank has appointed KPMG to conduct a detailed forensic audit, which is expected to take about 4 to 5 weeks to complete.
How are the authorities and the bank responding?
The Haryana government has taken strict action by de-empanelling IDFC First Bank, meaning the bank can no longer handle state government business for the time being. The state’s Chief Minister, Nayab Singh Saini, has assured the assembly that the government’s money is safe and recovery efforts are underway involving the police and Anti-Corruption Bureau.
The bank is also taking steps to manage the financial hit:
- Insurance Claim: The bank will claim ₹35 crore under its insurance policy for employee dishonesty.
- Suspensions: Four officials linked to the incident have been suspended pending investigation.
- Recovery: Recall requests have been sent to other banks to freeze accounts where the money was transferred.
