IDFC First Bank shares crashed by 16% lower circuit on BSE on Monday, February 23, after the lender informed stock exchanges that it had uncovered fraudulent transactions worth around ₹590 crore at one of its branches in Chandigarh, allegedly involving a few employees. At around 10:20 am, shares of the lender were trading lower at Rs 69.72.The matter first came to light when a department of the Haryana government asked the bank to close an account and transfer funds. During this process, the bank found that the balance mentioned by the department did not match the amount reflected in its system, according to the disclosure submitted to exchanges.
Over the following days, beginning February 18, several other Haryana government entities approached the bank with similar discrepancies in their balances. A preliminary internal review indicated that the issue was limited to a specific group of government-linked accounts within the Chandigarh branch and did not extend to other customers of the branch. The bank placed four employees under suspension and said the suspected activities may have involved other individuals or external entities.It added that the aggregate amount currently under reconciliation is approximately Rs 590 crore, although the final impact will depend on fund recovery, validation of claims and legal proceedings.
IDFC First Bank also outlined the steps taken so far. A meeting of the Special Committee of the Board for Monitoring and Follow-up of Frauds was held on February 20, followed by meetings of the Audit Committee and the Board on February 21. The bank is appointing an independent external agency to conduct a forensic audit and has also informed its statutory auditors. It has filed a complaint with the police and sent recall requests to other banks to mark lien on suspicious beneficiary accounts. In its filing, the bank said it would pursue strict disciplinary, civil and criminal action against those responsible. “The matter is confined to a specific group of Haryana government-linked accounts and the bank is fully cooperating with investigating authorities,” the disclosure noted. The Haryana government has asked its departments to temporarily halt banking operations with IDFC First Bank while the investigation progresses, a move that added pressure on the stock. Analysts said the fraud amount does not threaten the bank’s capital position but warned that provisions may dent near-term profitability.