IDFC First Bank flags ₹590 cr fraud in govt accounts: What we know so far

IDFC First Bank reported a suspected ₹590 crore fraud in Haryana government accounts, linked to staff at its Chandigarh branch; four employees suspended and KPMG to probe fraud

IDFC First Bank has reported a suspected fraud of about ₹590 crore involving some of its employees and others in accounts linked to the Haryana government. The lender shared the details in a regulatory filing and said it has informed the banking regulator and filed a police complaint.

 

The bank said the issue relates to a specific group of government-linked accounts handled at its Chandigarh branch. "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 filing said.

 

 

According to the bank, a Haryana government department had requested closure of its accounts and transfer of balances to another bank. During this process, the lender found discrepancies between the reported amounts and actual balances. Similar irregularities were later noticed in other state government accounts that interacted with the bank from February 18 onward.

 

The bank said the fraud currently appears limited to these government-linked accounts and does not affect other customers at the branch.

 

Bank appoints KPMG to probe fraud

 

The bank appointed KPMG to carry out an independent forensic audit into the suspected fraud. The decision, the bank said, was taken under the rules of the Securities and Exchange Board of India (Sebi).

 

According to the filing, the independent audit will look into the suspected irregularities and help determine how the fraud happened. The bank said the move is part of its efforts to ensure transparency and proper investigation.   

 

Fraud size under review, staff suspended

 

IDFC First Bank has estimated the suspected fraud amount at about ₹590 crore, though it said the final figure will be determined after reconciliation, validation of claims and recoveries.

 

Four employees have been suspended pending investigation. The bank said it will take strict disciplinary, civil and criminal action against those responsible, including external parties if found involved.

 

As part of recovery efforts, the lender has sent recall requests to certain beneficiary banks asking them to place liens on balances in suspicious accounts. It has also informed its statutory auditors and appointed an independent external agency to conduct a forensic audit.

 

The issue was reviewed by a special board committee on February 20, and later discussed with the audit committee and the full board.

 

Stock falls sharply after disclosure

 

Shares of IDFC First Bank fell nearly 15 per cent on Monday, marking their steepest drop in six years. The stock hit ₹70.98 during the session -- its lowest level since October 2025. It had earlier closed at ₹83.56 on the BSE on Friday, news agency Reuters reported.

 

Brokerage firm UBS estimated the suspected amount at about 22 per cent of the bank’s FY26 profit after tax but said the capital impact could be limited to around 1 per cent of net worth. Morgan Stanley also said the potential hit could be roughly 20 per cent of FY26 profit before tax.

 

Financial performance remains strong

 

For the December quarter, IDFC First Bank's deposits rose 24 per cent, with current and savings account deposits increasing 33 per cent. Net profit jumped 48 per cent year-on-year to ₹503 crore during the October-December period.