The Reserve Bank of India (RBI) is closely monitoring developments surrounding the Rs 590 crore suspected fraud at IDFC First Bank, Governor Sanjay Malhotra said, seeking to reassure markets that the issue does not point to a wider banking system concern.

“We are watching the development, there is no systemic issue,” Malhotra said, responding to questions on the matter, as the private lender grapples with one of the most significant fraud investigations in its history.

The controversy came to light following a routine account-closure request from a Haryana government department. While processing the request and preparing to transfer the remaining funds, the bank detected a mismatch between the balance claimed by the department and the amount reflected in its own records.

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The discrepancy triggered a deeper internal review. In the days that followed, beginning February 18, several other Haryana government entities approached the bank with similar concerns over inconsistencies in their account balances, intensifying scrutiny.

What began as a simple balance check has since escalated into a Rs 590 crore reconciliation exercise, prompting regulatory disclosures, multiple high-level internal meetings and a sharp fall in the bank’s share price.

IDFC First Bank has initiated an internal investigation and informed the regulator and other authorities.