IDFC First Bank shares registered a steep sell-off today, falling by as much as 18.8% in the early sessions. The stock hit an intraday low of ₹66.80 on the NSE as investors were anxious to learn the bank's exposure of a ₹590 crore fraudulent scheme that was exposed at its Chandigarh branch. This is a major blow to the private lender that had been growing steadily before this systemic failure was revealed.
How the ₹590 Crore Scandal Came To Light
This colossal anomaly was uncovered on a regular call by a Haryana Government department. On February 18, the department requested the bank to close its account and transfer all the remaining funds to a nationalized bank. During the reconciliation process, bank officials came across an alarming discrepancy between the balance that appeared on the bank’s ledger and the sum asserted by the government entity.
When the bank launched a broader investigation of the related accounts, it showed the issue was not isolated. Other Haryana government-linked entities reported discrepancies in their balances. As of Sunday, February 22, the bank officially told the stock exchanges the total amount under reconciliation was about ₹590 crore. The alleged fraud took place under unauthorized and fraudulent activities of some Chandigarh branch employees and may have been under collaboration of outside entities.
Fallout: Suspensions and De-empanelment
IDFC First Bank acted rapidly after detection, suspending four employees who they suspected of involvement and filing a complaint with the police. KPMG will also be conducting an independent forensic audit to ascertain the exact method of action and confirm any additional failings in internal controls, the bank also said. V. Vaidyanathan, CEO of IDFC First Bank, said, "We will get to the bottom of this and spare no single person involved," as investors were reassured that the bank was still healthy on capitalization.
However, reputational damage was immediate. On February 18, the Haryana Finance Department imposed a decree disallowing IDFC First Bank and AU Small Finance Bank to make business and activities in this sphere. All government departments, boards and corporations have been instructed to withdraw funds and to transfer them exclusively to nationalized banks.
Market Reaction and Institutional Concern
The 18% plunge shows chronic fears about branch-level oversight. The ₹590 crore tally accounts for some 40% of the bank's full-year FY25 net profit, but analysts say the biggest question isn't about capital hit it's about failing to reconcile high-value government accounts. Now, institutional investors are awaiting the forensic audit results to confirm whether the fraud is, or appears to be, "confined" to one branch, as the bank says, or whether it points to a wider area of weakness within the lender's digital and physical security infrastructure.
