A shocking Rs 590 crore fraud has erupted at IDFC First Bank’s Chandigarh branch, triggering a 20% nosedive in its share price to the lower circuit on Monday. Allegations point to rogue employees manipulating Haryana government accounts, exposing deep operational flaws.
The stock opened 10% lower at Rs 75.16 against Friday’s close of Rs 83.51, before sliding further to Rs 66.80 amid heavy selling pressure. A modest rebound saw it trade at Rs 70.39, down 15.71% by late morning.
IDFC First acted decisively, informing regulators and filing a police complaint. The bank suspended four officers and clarified the issue is confined to specific Haryana-linked accounts at one branch. Their exchange disclosure revealed ‘unauthorized and fraudulent activities’ potentially involving outsiders.
Analysts from independent brokerages estimate the hit at 0.9% of total assets and 20% of FY26 pre-tax profits, a significant dent for the lender. The revelation has amplified scrutiny on internal controls and employee vetting processes.
Haryana’s government responded aggressively, barring IDFC First and AU Small Finance Bank from all state business until further notice. The order covers deposits, investments, and transactions across departments, boards, and PSUs, with immediate account closures and fund transfers mandated.
The finance department cited repeated violations in fixed deposit schemes, where state funds were diverted to savings accounts yielding lower returns, inflicting losses. New protocols demand rigorous compliance verification, monthly matching, and anomaly reporting, with deadlines set for March 31 and April 4, 2026.
This high-profile scam not only erodes investor confidence but also prompts a reevaluation of risk management in banking partnerships with governments. As investigations unfold, the sector watches closely for ripple effects on similar institutions.