Synopsis: IDFC First Bank Limited has uncovered a massive “unauthorized and fraudulent” scheme involving approximately ₹590 crore (approx. $65 million) across accounts linked to the Haryana government. The bank has suspended four employees at its Chandigarh branch and initiated a forensic audit to track the diverted funds.
In a significant regulatory filing on February 22, 2026, IDFC First Bank revealed the detection of a major financial discrepancy at its Chandigarh branch. The matter surfaced after a department of the Haryana Government requested the closure of its account and the transfer of funds to another bank. Upon processing the request, bank officials noticed a stark difference between the balance reflected in the bank’s internal systems and the amount claimed by the government entity.
Scope and Nature of the Fraud
Following the initial discovery on February 18, several other Haryana government-linked entities—including boards, corporations, and universities—approached the bank. Similar discrepancies were found across a specific group of accounts.
The bank clarified that:
- Localized Impact: The fraud is strictly confined to a specific group of Haryana government accounts at the Chandigarh branch.
- Internal Collusion: Preliminary investigations suggest certain branch employees may have colluded with external individuals to misappropriate funds.
- Reconciliation Amount: The total aggregate amount under reconciliation is currently estimated at ₹590 crore.
Immediate Corrective Actions
IDFC First Bank has moved swiftly to contain the damage. A meeting of the Special Committee of the Board for Monitoring and Follow-up of Frauds (SCBMF) was convened on February 20, followed by a full Board briefing on February 21.
- Suspensions: Four employees suspected of involvement have been placed under immediate suspension.
- Legal Action: A formal police complaint has been filed, and the bank is cooperating with law enforcement agencies.
- Recovery Efforts: The bank has sent urgent requests to various beneficiary banks to lien-mark (freeze) suspicious accounts to secure potential recoveries.
- Forensic Audit: An independent external agency is being appointed to conduct a comprehensive forensic audit of the transactions.
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Market and Regulatory Implications
This incident aligns with a new Haryana Government directive. The state recently ordered all departments to move their funds from private lenders to nationalized banks.
IDFC First Bank claims that this situation will not affect other customers or branches. However, the ₹590 crore discrepancy is significant. Because of this scale, the stock sentiment may face downward pressure in the short term.
The final financial impact remains uncertain. It will depend on two main factors:
- The recovery of funds from the flagged beneficiary accounts.
- The successful validation of all claims.
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