By NSB.News Desk
Shares of IDFC First Bank fell nearly 19% on February 23 after the lender disclosed a ₹590-crore fraud involving certain employees and accounts linked to the Government of Haryana.
At 9:45 pm, the stock was trading around ₹68 per share, down almost 19%, with over 2.15 million pending sell orders and no buyers on the counter, according to exchange data.
Fraud Confined to Specific Government-Linked Accounts
In its exchange filing, the bank stated that a preliminary internal review found the issue to be confined to “a specific group of government-linked accounts within Haryana Government operated through the said branch in Chandigarh.” It clarified that the matter does not extend to other customers of the Chandigarh branch.
The bank has informed the banking regulator and filed a police complaint. Four officials have been suspended pending investigation, with the bank promising strict disciplinary, civil, and criminal action against employees and any external parties involved.
The fraud surfaced after a Haryana government department requested closure of an account and transfer of balances to another bank. During the process, discrepancies were observed between the stated amount and the actual balance. Similar irregularities were subsequently identified in other Haryana government-linked accounts from February 18 onwards.
Currently, the estimated fraud size stands at ₹590 crore, though the bank noted that a reconciliation exercise is underway to determine the final amount after validating claims and accounting for potential recoveries.
Financial Impact: Limited Capital Hit, But Profit Pressure
Brokerage estimates suggest the amount under reconciliation equals roughly 0.9% of the bank’s net worth and about 20% of its fiscal 2026 pre-tax profit.
UBS estimated the suspected amount at around 22% of FY26 profit after tax, while indicating that the capital impact may be limited to about 1% of net worth.
Morgan Stanley pegged the potential hit to FY26 profit before tax at roughly 20%.
Jefferies said the lender must reassure investors that the issue is not systemic and has not spread to other clients.
Haryana Government De-Empanels Two Banks
In a related development, the Government of Haryana de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect until further orders.
According to an official circular issued by the Finance Department, no government funds will be parked, deposited, invested, or transacted through these institutions during this period.
Recovery Measures Initiated
As part of recovery efforts, IDFC First Bank has sent recall requests to certain beneficiary banks, asking them to lien-mark balances in suspicious accounts. The bank emphasized that the matter appears to involve unauthorized and fraudulent activities by certain employees at a specific branch in Chandigarh, potentially in collusion with external entities.
While the capital impact appears manageable, the sharp stock reaction highlights investor concerns over governance, internal controls, and reputational risks. The focus now shifts to the final reconciliation outcome and the bank’s ability to restore market confidence.