IDFC First Bank Fraud: MD V Vaidyanathan Flags Employee Collusion in ₹590 Crore Haryana Government Account Case

₹590 Crore Discrepancy Linked to Collusion at Single Branch​

Mumbai, February 23: IDFC First Bank Managing Director and Chief Executive V Vaidyanathan on Monday described the ₹590 crore fraud involving Haryana government accounts as a case of collusion between certain bank employees and external parties.

Speaking during a specially convened investor and analyst call ahead of market hours, Vaidyanathan clarified that the issue was confined to one branch and one client group. He said the fraudulent activity involved forged physical cheque transactions and stressed that there was no system reporting error.

The bank has pegged the discrepancy at ₹590 crore, comprising ₹490 crore identified after reconciliation and an additional ₹100 crore that was self identified through internal checks. The management indicated that the amount is unlikely to increase from current estimates.

Forensic Audit Underway, Provisions to Be Made​

The lender has appointed KPMG to conduct an independent forensic audit, which is expected to conclude within four to five weeks.

Vaidyanathan stated that the bank will make provisions in line with its policy of recognizing stress upfront. However, he said the impact on profitability is unlikely to be significant, adding that wider net interest margins and credit costs are expected to support earnings.

On a standalone basis, he noted that the bank was anticipating a solid fourth quarter in terms of profitability.

Regulatory Action and Recovery Steps​

The Haryana government has de empaneled IDFC First Bank and AU Small Finance Bank from undertaking government business following the disclosure. AU Small Finance Bank has denied any wrongdoing.

IDFC First Bank has filed police complaints, informed regulators and auditors, and initiated recovery and lien marking actions across the banking system.

Vaidyanathan also said that potential recoveries and employee dishonesty insurance cover of ₹35 crore could help reduce the overall financial impact.

Exposure Limited Within Deposit Base​

According to the bank, deposits from the specific Haryana government account represent about 0.5 percent of its total deposits. Overall government deposits, including central and state entities, account for 8 to 10 percent of the deposit base.

For the quarter ended December 31, 2025, IDFC First Bank reported a 24 percent increase in deposits, including a 33 percent rise in the share of low cost current and savings account deposits. Net profit for the October to December period rose 48 percent to ₹503 crore.

At 11:15 hrs on Monday, shares of IDFC First Bank were trading 15.58 percent lower at ₹7,054 apiece on the BSE.