IDFC First Bank fraud: IDFC First Bank shares hit its 10% lower circuit of ₹75.21 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.
As per the lender, the issue came to light after it received a request from a department of the Haryana government seeking closure of its account and transfer of funds to another bank. During this process, the bank noticed discrepancies between the amount mentioned in the request and the actual balance in the account, prompting a deeper review.
“The aggregate amount under reconciliation across the identified accounts at the abovementioned Branch is approximately ₹590 crore. 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 said in a regulatory filing.
Haryana government’s de-empanellment
Following the disclosure, the Haryana government on Sunday de-empanelled IDFC First Bank and AU Small Finance Bank from handling government business with immediate effect.
As per a circular issued by the Finance Department, no government funds will be parked, deposited, invested or transacted through these banks until further orders.
“IDFC First Bank and AU Small Finance Bank are hereby de-empanelled for government business in Haryana with immediate effect till further orders,” according to a circular issued by the Finance Department.
The state government directed all departments, organisations, boards, corporations and public sector undertakings to immediately transfer balances and close accounts maintained with the two banks. The Finance Department also highlighted lapses in compliance with fixed deposit instructions, noting that funds meant for flexible or higher-yield fixed deposits were allegedly kept in savings accounts, resulting in lower returns and financial losses.
All departments have been asked to strictly adhere to approved deposit terms, carry out monthly reconciliations, and report discrepancies to the Finance Department. The government has directed that all reconciliations be completed by March 31, 2026, with a certified compliance report to be submitted by April 4, 2026.
What is known about the fraud so far
IDFC First Bank said that, on a preliminary basis, unauthorised and fraudulent activities appear to have been carried out by certain employees at the Chandigarh branch in a specific set of Haryana government accounts, potentially involving other individuals or entities. The lender added that the estimated fraud amount of ₹590 crore remains subject to reconciliation and could change once additional information and recoveries are factored in.
The bank explained that similar discrepancies were observed in other Haryana government-linked accounts from February 18 onwards. It clarified that an initial internal review suggested the issue is limited to a specific group of government-related accounts operated through the Chandigarh branch and does not affect other customers of the branch.
Four bank officials have been suspended pending investigation. IDFC First Bank said it will initiate strict disciplinary, civil and criminal proceedings against employees and external parties found to be involved. The matter was placed before the Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds on February 20, 2026.
The lender also said it is in the process of appointing an independent external agency to conduct a forensic audit. A complaint has been lodged with the police, and the bank has assured full cooperation with investigating agencies. In addition, recall requests have been sent to certain beneficiary banks to mark liens on balances in suspicious accounts.
