IDFC First Bank Shares Hit 20% Lower Circuit After ₹590 Crore Fraud Disclosure

Stock Crashes as Fraudulent Transactions Surface at Chandigarh Branch​

Mumbai, February 23: Shares of IDFC First Bank tumbled to the 20 per cent lower circuit on Monday after the lender disclosed fraudulent transactions amounting to around ₹590 crore at its Chandigarh branch.

The stock fell sharply to an intraday low of ₹66.85, marking a full 20 per cent decline. It had opened nearly 10 per cent lower before extending losses in early trade. At 10:33 am, the shares were trading at ₹70.10, down 16.06 per cent for the day.

The steep fall followed the bank’s regulatory filing detailing unauthorized activities allegedly carried out by certain employees.

Fraud Confined to Haryana Government-Linked Accounts​

According to the bank, the matter is restricted to a specific set of Haryana state government-linked accounts handled at its Chandigarh branch.

In its stock exchange filing, the bank stated that prima facie unauthorized and fraudulent activities were carried out by certain employees at the branch, potentially involving other individuals, entities, or counterparties. The lender said it has informed regulators and lodged a police complaint.

Four officials have been suspended pending further investigation.

Financial Impact Estimated at 0.9% of Net Worth​

Independent brokerage estimates indicated that the suspected fraud represents nearly 0.9 per cent of the bank’s net worth and about 20 per cent of its FY26 pre-tax profit, underlining the scale of the impact relative to its financial metrics.

The disclosure triggered sharp selling pressure in the counter, pushing the stock to its lower circuit limit within hours of market opening.

Haryana Government De-Empanels IDFC First Bank, AU Small Finance Bank​

In a parallel development, the Haryana government removed both IDFC First Bank and AU Small Finance Bank from handling government business with immediate effect until further orders.

An official circular directed all departments, boards, corporations, and public sector undertakings to discontinue using the two banks for deposits, investments, or any other financial dealings.

Authorities have also been instructed to transfer existing balances and close accounts maintained with the lenders.

Finance Department Flags Lapses in Deposit Handling​

The Haryana Finance Department highlighted lapses in adherence to fixed deposit instructions. It noted that in certain cases, funds intended for flexible deposits or higher-interest fixed deposit schemes were allegedly parked in savings accounts, resulting in lower returns and financial loss to the state.

Departments have been directed to strictly follow approved deposit terms, conduct regular compliance verification with banks, carry out monthly reconciliations, and report discrepancies without delay.

All reconciliations must be completed by March 31, 2026. A certified compliance report is required to be submitted by April 4, 2026.

The developments have intensified scrutiny on internal controls and compliance systems at the bank, even as investigations remain underway.