Mumbai: IDFC First Bank’s share price fell sharply after the bank disclosed a suspected fraud of Rs 590 crore at its Chandigarh branch. The stock dropped nearly 20 percent on Monday, as investors reacted to concerns about the possible impact on earnings.
The bank said some employees at the Chandigarh branch carried out unauthorised transactions in accounts linked to the Haryana government. This led to a deposit balance mismatch of around Rs 590 crore.
Management clarified that the issue is limited to only one branch and does not affect its network of over 1,000 branches across India.
How The Issue Was Detected?
The matter came to light after the Haryana government noticed discrepancies in account statements after February 18 and alerted the bank.
Following this, the bank reviewed and reconciled the related accounts. Management stressed that there was no technology or system failure. All alerts, SMS notifications and statements were generated as per standard procedures.
The transactions were done using cheque-based instruments, not digital channels. This suggests alleged employee collusion with third parties, rather than any hacking or system breach.
Forensic Audit And Action Taken
The bank has appointed KPMG to conduct a detailed forensic audit. The audit will examine the full chain of events, identify responsibility and check intent. The process is expected to take 4–5 weeks.
Employees allegedly involved have been suspended, and police complaints have been filed. The Board has also taken note of the issue and is acting as per regulatory guidelines.
Recovery And Financial Position
Management said recovery efforts are ongoing. Funds were transferred to multiple banks, which are cooperating in the investigation. The bank expects further recoveries after reviewing all transactions.
On financial strength, IDFC First Bank said it remains well-capitalised. Its liquidity coverage ratio is around 115 percent, and capital adequacy is above regulatory requirements.
Haryana-related deposits form only about 0.5 percent of total deposits, while overall government deposits account for 8–10 percent. The bank also has employee dishonesty insurance of around Rs 35 crore.
Despite the incident, management maintained that core operations are strong and guided for a net interest margin of around 5.8 percent for the current quarter. It described the fraud as a one-off, branch-level event.
