IndusInd crisis an episode and not failure, banking system is secure, says RBI governor

Sanjay Malhotra, Governor, Reserve Bank of India

Reserve Bank of India governor Sanjay Malhotra has said India’s banking system remains “safe and secure” and described as “episodes” and not “failures” the IndusInd Bank accounting lapses and restrictions on New India Cooperative Bank.

Malhotra was responding to a question if there were larger systemic concerns around the accounting lapses at the private lender and the failure of the Mumbai-based New India Cooperative Bank.

With 10,000 non-banking financial companies (NBFCs) and around 1,500 cooperative banks, occasional "episodes" are inevitable, the governor said at the customary post-policy press meet on April 9.

"These are not even failures, they’re episodes. These things will happen," he added.

The Indian banking system remains "safe, secure, and robust" at a systemic level, Malhotra said.

In the last eight or nine years, about 70 cooperative banks out of 1,500 have faced issues, which is a small fraction, Malhotra said.

An investigation is underway and based on its findings, appropriate action would be taken and those responsible identified, deputy governor Swaminathan Janakiraman said to a query about management being allowed to continue at the Mumbai-based private lender

In March, IndusInd Bank reported Rs 1,577-crore accounting discrepancy in its derivatives portfolio.

The comments come amid growing scrutiny of the bank, though the RBI has said such isolated incidents should not overshadow the resilience of the country’s banking framework.

The New India Cooperative Bank crisis erupted in 2025, with a Rs 122-crore embezzlement issue leading to arrests, property attachments, and severe restrictions by the RBI.

The RBI’s approach, according to the governor, is to "minimise the frequency and impact of such events" through a combination of regulatory oversight, supervision, and collaboration with banks’ internal mechanisms.

"We have various tools, regulations, supervision, and the banks themselves have multiple layers: their business units, compliance teams, and audits. We all need to work together to continuously improve the system," he added.