The Chandigarh branch of IDFC First Bank is in the middle of a storm after Rs 590 crore fraud involving Haryana government accounts was disclosed recently.
The Bank said in an exchange filing that some employees at IDFC First Bank’s Chandigarh branch were involved in fraudulent activities involving Rs 590 crore from accounts linked to the Haryana government.
“The Bank has filed a complaint with the Police authorities and will extend full cooperation to the investigating agencies. The Bank has sent recall request to certain beneficiary banks to lien mark balance in suspicious accounts held in these banks,” according to the filing.
Are FD, savings account deposits at risk for IDFC First Bank customers?
IDFC First Bank has said that based on the preliminary internal review conducted, the matter is confined to a specific group of government-linked accounts within Haryana Government operated through the said branch in Chandigarh. It “does not extend to other customers of the Chandigarh Branch,” said IDFC First Bank said.
IDFC First Bank customers Should Not panic
Retail savings accounts, fixed deposits or regular customers of IDFC First Bank should not panic. As per the bank statement, there is no sign that retail savings accounts, fixed deposits or regular customers across India have been directly affected by the IDFC First Bank fraud.
The impact may be determined based on receipt of further information, validation of claims, recoveries of any nature including those made through the process of marking lien on fraudulent beneficiary accounts maintained with other Banks, liabilities of other entities involved in the fraudulent transactions, and the legal recovery process, IDFC First Bank has said.
Will IDFC First Bank customers deposit be affected? What are their consumer rights?
Account holders of the bank have the right to information to know whether or not their specific account has been compromised. Any customer who discovers fraud in their specific account via an unauthorized electronic transaction should report it within 3 working days, at which point their liability is zero.
What actions should retail IDFC First Bank customers take?
* IDFC First Bank customers should be aware that currently there is no regulatory restriction on withdrawals.
* Customers should avoid reacting to unverified social media rumours.
* Monitor any official communication from the bank.
* Keep deposits diversified across banks as a safety practice.
* Ensure deposits are within insured limits as a safety precaution.
IDFC Bank fraud: What has RBI said?
The Reserve Bank of India (RBI) has said that there is no systemic risk to the banking system and stressed that the Central Bank does not comment on individual banks or regulated entities, as IDFC First Bank revealed the Rs 590-crore fraud at its Chandigarh branch.
Addressing a joint press conference after a meeting of the RBI’s central board of directors in the national capital, RBI Governor Sanjay Malhotra said the regulator is closely monitoring the situation but there is no broader threat to financial stability.
All deposits insured under DICGC
IDFC First Bank has not yet disclosed what would happen to the deposits made by its branch customers. However, as per general guidelines, all bank deposits are covered under the insurance scheme offered by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC), subject to certain conditions.
The insurance covers fixed deposits, savings accounts, recurring deposits and current accounts. Under the DICGC scheme, in case of bank failure, liquidation, or merger, it covers a maximum of Rs 5 lakh per depositor per bank that includes principal and interest.
Post- Update: Meanwhile, an IANS report has mentioned that the Haryana Vigilance and Anti-Corruption Bureau registered an FIR on Tuesday (February 24) in the Rs 590-crore fraud involving Haryana government accounts at the Chandigarh branch of IDFC First Bank and AU Small Finance Bank.
