A major financial fraud of ₹590 crore has been detected at the Chandigarh branch of IDFC First Bank, involving accounts of various departments of the Haryana government. Following the incident, the bank has suspended four officials.
The fraud came to light when a Haryana government department requested closure of its account and transfer of funds to another bank. A reconciliation between the bank’s records and the department’s own statements revealed a significant mismatch, prompting a detailed verification that uncovered a shortfall running into hundreds of crores.
Since February 18, more government entities have approached authorities with similar complaints.
After news of the fraud surfaced, IDFC First Bank shares fell nearly 20% today during trading. The stock is currently trading at ₹69. In a single trading session, the bank lost approximately ₹14,438 crore in market capitalisation.
The amount involved in the fraud is reportedly higher than the bank’s quarterly profit, triggering panic among investors and leading to heavy selling pressure.
The discrepancy was identified when a government department sought to close its account and transfer funds to another bank. Differences between the bank’s recorded balance and the department’s internal records raised suspicion.
Subsequent investigations revealed that certain officials at the bank’s Chandigarh branch allegedly colluded with external individuals to siphon off government funds. A shortfall of around ₹590 crore has been recorded in the affected accounts.
In response, the Haryana finance department has taken strict action. IDFC First Bank and AU Small Finance Bank have been de-empanelled from handling government transactions.
The government has directed that no fresh deposits of public funds be made in these banks and that existing accounts be closed immediately, with balances transferred to public sector banks.
IDFC FIrst Bank stated that the incident was a planned act carried out by a few employees of the Chandigarh branch in collusion with external parties. It has estimated the irregularity at ₹590 crore on a preliminary basis.
The bank has filed a police complaint and appointed an independent agency to conduct a forensic audit. The management clarified that the fraud does not impact regular retail customers or routine banking operations.
AU Small Finance Bank was de-empanelled after it emerged that a portion of the siphoned funds had been routed through accounts with the bank. However, AU Small Finance Bank clarified that there has been no financial impact on the bank and that there was no indication of any fraudulent activity on its part.