IDFC First Bank has refunded ₹583 crore, including principal and interest, to various departments of the Haryana government after uncovering a ₹590 crore fraud at its Chandigarh branch. The bank has initiated a forensic audit and is working with law-enforcement agencies to recover the remaining amount and fix accountability.
The fraud came to light over the weekend after a Haryana government department sought to close its account and transfer funds to another bank. During the process, officials noticed a mismatch between the balance claimed by the department and the amount reflected in the account.
In a regulatory filing on February 24, the bank said it had paid 100 percent of the principal and interest claimed by the state government, amounting to a net ₹583 crore, even though investigations are still ongoing.
The lender said it is coordinating closely with relevant Haryana government departments and law-enforcement agencies to pursue action against those responsible and recover the diverted funds.
The bank described the episode as an “isolated” incident, allegedly involving collusion between certain employees and external parties. Funds were reportedly transferred to beneficiaries outside the bank.
The employees involved have been suspended. The bank has appointed KPMG to conduct a forensic audit. The audit report is expected within four to five weeks.
The bank reiterated its commitment to governance and ethical standards, stating that it chose not to delay payment to the government despite the ongoing probe.
Shares of IDFC First Bank recovered on Tuesday and were trading in the green after the refund announcement. The stock had fallen more than 16 percent on Monday following disclosure of the fraud.
According to a report by brokerage Motilal Oswal, the ultimate financial impact on the bank will depend on the extent and timing of recoveries after the forensic audit and legal proceedings.
The brokerage said that in a worst-case scenario, assuming negligible recovery, the required provisioning could reduce the bank’s profit before tax for the fourth quarter of FY26 by as much as 56 percent.
The bank, however, maintained that it is building a strong institution with robust governance standards and expressed confidence that it will emerge stronger from the incident.
