An IDFC First Bank outlet in Bengaluru. The fraud was disclosed in accounts held by the Haryana government with the bank. (Photo: Wikimedia Commons)The Rs 590-crore fraud at one of IDFC First Bank’s Haryana branch is not an isolated incident in the country’s banking sector, especially where employees of the bank allegedly orchestrated the fraud. A tightening of monitoring and supervision by the regulator Reserve Bank of India (RBI) in recent years notwithstanding, the sector has witnessed multiple cases of frauds involving internal manipulations.IDFC First Bank on Sunday disclosed the Rs 590-crore fraud committed allegedly by its employees and others in accounts held by the Haryana government with the bank. The bank reported the matter to RBI and also filed a police complaint. “This is a specific isolated incident that happened in one branch. Clearly some employees were involved and external parties were also involved,” the bank said, adding that it has appointed KPMG to initiate an independent forensic audit in this matter.After the 1991 securities scam in which half a dozen banks, including State Bank of India, were caught off guard, the RBI has progressively tightened its supervisory system. Even with enhanced regulatory frameworks, risk-based supervision and stricter audit requirements, instances of internal collusion, falsification of records and siphoning off of funds have continued to surface across both public and private sector banks. These episodes highlight that while regulatory oversight may have strengthened, fraud risk often arise from governance lapses and weak internal controls.The case allegedly involving Rs 13,000-crore in Punjab National Bank (PNB) is one of India’s largest documented banking frauds. Two PNB officials issued fraudulent Letters of Undertaking (LoUs) to overseas firms linked to Nirav Modi and Mehul Choksi without proper collateral, enabling unauthorised credit access. It turned out to be a massive exercise deliberately kept out of the normal banking practices with the alleged connivance of top officials from credit, human resources and IT departments and went on undetected for several years. The bank allegedly lent money to Nirav Modi and Mehul Choksi without collateral and it was not paid back. Many such LoUs and LCs eventually became non-performing assets (NPAs).Bank of Baroda caseIn 2015, a foreign exchange fraud allegedly involving Bank of Baroda (BoB) was detected. There was illegal, disguised remittance of around Rs 6,000 crore to Hong Kong from its Ashok Vihar branch in New Delhi. The funds were transferred under the guise of advance payments for imports that never actually took place. CBI and ED investigated the fraud, arrested several individuals, including two bank officials. The investigation highlighted that 59 companies opened current accounts to send money regularly between August 2014 and August 2015.ICICI bank case ICICI bank case allegedly involving its MD and CEO Chanda Kochhar rocked the banking system. The ICICI Bank case related to loans of about Rs 3,250 crore sanctioned between 2009 and 2012 by ICICI Bank to the Videocon Group when Kochhar was the MD & CEO. After Videocon defaulted, allegations arose that its promoter Venugopal Dhoot invested in a company linked to Kochhar’s husband Deepak Kochhar, raising concerns of a possible quid pro quo and conflict of interest.The matter was investigated by the CBI and ED. Kochhar stepped down in 2018. She was arrested in 2022, and later received relief from the Bombay High Court citing procedural lapses. An internal inquiry found violations of disclosure norms, leading to withholding of certain retirement benefits of Kochhar, making it one of India’s most prominent banking governance controversies.IndusInd bank caseStory continues below this adIn 2025, IndusInd Bank had disclosed that an internal review of its derivative portfolio revealed a potential 2.35 per cent “adverse impact” on its net worth. Weeks after IndusInd Bank disclosed accounting lapses and losses of nearly Rs 2,000 crore in its derivatives portfolio that triggered a rout in its shares, the bank’s Managing Director & CEO Sumant Kathpalia resigned.The matter related to the disclosure made by the IndusInd Bank on March 10, 2025 in which it informed stock exchanges about discrepancies in its derivative portfolio. Market regulator SEBI later restrained Kathpalia, ex ED, Deputy CEO Arun Khurana and three other senior officials from accessing markets for insider trading in the bank’s scrip. The bank reported a net loss of Rs 2,329 crore for the quarter (Q4) ended March 2025.Citibank caseCitibank India came across a Rs 400-crore scam in 2010-2011 involving a Gurgaon-based relationship manager who duped high-net-worth clients into a bogus investment scheme, leading to arrests and regulatory fines. He was charged with luring high net worth individuals and corporate entities into making investments and then diverting the money to the stock market and causing huge losses to the tune of over Rs 400 crore.Yes Bank caseThe RBI superseded the board of Yes Bank on March 5, 2020, due to a serious deterioration in its financial position. Rana Kapoor, co-founder of Yes Bank, was arrested in 2020 for an alleged fraud involving kickbacks for loans, mainly through a conspiracy with DHFL promoters, resulting in several alleged illicit transactions. The scandal allegedly involved receiving Rs 600 crore in bribes for investing Rs 3,700 crore in DHFL debentures © The Indian Express Pvt LtdTags:Explained EconomicsExpress Explained