IDFC First Bank shares to be in focus post disclosure of Rs 590 crore fraud – BusinessToday

When stock markets open on Monday, shares of IDFC First Bank will be in focus. The private sector lender finds itself in a tight situation after a suspected fraud to the tune of Rs 590 crore was detected at one of its branches in Chandigarh.

The issue may be restricted to a particular branch, but its scale is more than the bank’s Rs 503 crore net profit for the October-December quarter and over 38 per cent of its full year net profit for 2024-25.

The lender said it had received a request from a particular department of Haryana government for closure of its account and transfer of funds to another bank. In the process, certain discrepancy was observed in the amount mentioned and the balance in the account.

From February 18, 2026 onwards, certain other Haryana government entities also engaged with the bank with regard to their respective accounts and differences were observed between the balances in the account and the balances entities holding accounts with the bank mentioned.

According to recent reports in the local Haryana press, the state government had decided to close all bank accounts in two private banks and had directed government departments as well as state-owned undertakings to withdraw money from private banks and they will only be able to have accounts in public sector banks.

IDFC First Bank said that upon conducting a preliminary interview, the matter was found to be confined to only a specific group of government-linked accounts within Haryana government operated the particular branch in Chandigarh and does not extend to other customers of the branch.

The aggregate amount under reconciliation across the identified accounts at the particular branch is said to be around Rs 590 crore and the actual impact may be determined based on receipt of further information, validation of claims, recoveries of any nature including those made through the process of marking lien on fraudulent beneficiary accounts maintained with other banks, liabilities of other entities involved in the fraudulent transactions, and the legal recovery process, according to the Mumbai-based bank.

Four officials of the bank have already been placed under suspension pending investigation and the lender is going to appoint an independent external agency to conduct a forensic audit.

IDFC First bank has filed a police complaint and said it will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, as per applicable law. Meanwhile, the audit committee, board of directors and the statutory auditors have been apprised of the matter.

Considering government accounts were involved and the issue went undetected till it was approached for closure of the account by the government department, questions are bound to be raised on internal checks and balances, and branch-level governance.  All eyes will now be on the independent audit that it plans to undertake and what it reveals.  

For the bank, which had just put the microfinance troubles behind, this could be a fresh setback.

IDFC First Bank had a tough 2024-25 financial year, amid the troubles in the micro-finance industry. In the year-ended March 2025, the lender had reported a 48 per cent decline in net profit to Rs 1,525 crore.

The bank had seen higher slippages in its microfinance book last financial year and rising delinquency had prompted it to track the microfinance business closely. It reduced the microfinance portfolio by over 28 per cent and its proportion to overall loan-book to 4 per cent in March 2025 from 6.6 per cent in March 2024.

IDFC First Bank saw a sharp turnaround in the recent October-December quarter, with net profit surging 48 per cent year-on-year to Rs 503 crore from Rs 339 crore in December 2024. For the nine-months period from April-December 2025, its net profit was up 8 per cent to Rs 1,317 crore from Rs 1,221 crore in the same period a year ago.

Over the past year, IDFC First Bank shares have risen close to 39 per cent, outperforming the Nifty Bank index, which has gained 26 per cent in the same period.