IDFC First Bank reports ₹590 crore fraud at its Chandigarh branch

Affected accounts belong to Haryana govt ; 4 suspended

Private-sector lender IDFC First Bank on Sunday said it had detected a ₹590 crore fraud at one of its branches in Chandigarh, pertaining to accounts related to the Haryana state government.

 

The bank has suspended four of its branch employees. 

The discrepancies came to notice after one of the state government departments sought to close its bank account with IDFC First Bank and transfer the funds to another bank. However, the amount mentioned by the department did not match the balance in the account. 

A bank has to set aside capital, in terms of provisioning, once a fraud is detected. The quantum of fraud detected by the bank is more than the ₹503 crore net profit it reported for the October-December quarter of 2025-26. 

In a regulatory filing to the exchanges, the bank said it was in the process of appointing an independent external agency to conduct a forensic audit. The regulator and the statutory auditors have been informed about the fraud, it said. The Mumbai-based lender said a preliminary internal assessment identified “unauthorised and fraudulent activities” carried out by certain employees at a specific branch in Chandigarh, potentially in collusion with other individuals or entities. 

After the discrepancies were observed between the amount mentioned in the Haryana government department’s request and the account balance, other state government entities approached the bank regarding their respective accounts starting from February 18. Differences were again observed between the balances reflected in the bank’s records and those stated by the account holders. 

“Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals / entities/counterparties,” the bank said, while clarifying that this does not extend to other customers of the branch. 

“The aggregate amount under reconciliation across the identified accounts at the above-mentioned branch is approximately ₹590 crore,” the bank said in its filing. It added that the final financial impact would be determined after validating claims, recovery efforts, including lien marking on beneficiary accounts maintained with other banks, and completing legal proceedings.

The bank also said recall requests had been sent to certain beneficiary banks to lien-mark balances in suspicious accounts. 

The lender suspended four suspected officials pending investigation and said it would pursue strict disciplinary, civil, and criminal action against responsible employees and external individuals. 

A meeting of the board’s special committee for monitoring and follow-up of cases of fraud was convened on February 20. The matter was subsequently placed before the audit committee and the board of directors at a meeting held on February 21. 

IDFC First Bank said it had filed a complaint with the police authorities and was also in the process of filing further complaints with appropriate law enforcement agencies and reporting to relevant authorities. The bank said it would extend full cooperation to investigating agencies. 

On Friday, the bank’s share closed at ₹83.56 apiece, up 0.72 per cent from its previous close.

 

Haryana de-empanels IDFC First, AU SFB for govt business in state

 

The Haryana state government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business in the state. “No government funds shall henceforth be parked, deposited, invested, or transacted, through these banks”, the government notification, issued on February 18 stated. 

Under the new norms, administrative secretaries can approve the opening of accounts for government schemes only in nationalised banks operating in the state, while opening accounts in private sector banks will require prior approval. 

The state-government further highlighted that their finance department has noticed that certain banks are not adhering to the conditions under which fixed deposits are being made by the departments and corporations. “In several cases, it has been observed that despite clear instructions to place funds in flexible fixed deposits, or other fixed deposit instruments, offering higher rates of interest, banks are retaining the funds in savings account, resulting in lower returns, and consequential financial loss  to the government”, it said.