IDFC FIRST Bank informed the stock exchanges of a significant fraud involving unauthorized activities by employees at its Chandigarh branch. The aggregate amount under reconciliation is estimated at approximately ₹590 crore.
The incident is particularly notable as the quantum of the fraud is roughly 45% of the bank’s net profit for the first nine months of FY26.
How the Fraud Surfaced
The discrepancies came to light during a routine administrative process initiated by a client.
- Account Closure Trigger: A department of the Haryana Government requested to close its account and transfer funds to another bank. During this process, officials noticed a mismatch between the government’s claimed balance and the bank’s records.
- Cluster Impact: Following the initial discovery on February 18, other Haryana Government entities contacted the bank, revealing similar patterns of unauthorized transactions.
- Contained Scope: Preliminary reviews suggest the fraud is confined to a specific group of government-linked accounts at the Chandigarh branch and has not affected retail or other corporate customers.
Immediate Actions Taken
The bank moved quickly to initiate legal and internal recovery protocols:
- Suspensions: Four officials suspected of involvement or negligence have been placed under suspension.
- Lien Marking: The bank sent “recall requests” to various beneficiary banks to mark a lien (freeze) on suspicious accounts where the fraudulent funds were transferred.
- Forensic Audit: An independent external agency is being appointed to conduct a forensic audit to determine the exact timeline and mechanism of the fraud.
- Law Enforcement: A formal police complaint has been filed, and the bank is cooperating with investigative agencies for criminal proceedings.
Financial and Governance Impact
The bank’s leadership held emergency meetings of the Audit Committee and the Board of Directors on February 20 and 21 to apprise them of the development.
| Contextual Metric | Value / Impact |
| Fraud Amount | ₹590 Crore (Approx.) |
| Q3 FY26 Net Profit | ₹503 Crore (The fraud exceeds a full quarter’s profit) |
| Stock Reaction | Shares closed at ₹83.56 on Friday; expected to be under heavy pressure on Monday, Feb 23. |
| Provisions | The bank noted that the final impact will depend on the success of fund recoveries and legal proceedings. |
“The Bank is pursuing strict disciplinary, civil, and criminal action against the employees and other external individuals responsible.” — Satish Gaikwad, General Counsel & Company Secretary.
