IDFC First Bank discloses fraud of ₹590 cr in a Chandigarh branch – CNBC TV18

IDFC First Bank has disclosed a fraud of approximately ₹590 crore at its Chandigarh branch, involving certain government-linked accounts, following a preliminary internal assessment.

The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect, directing that no government funds be parked, deposited, invested, or transacted through these banks until further notice. All departments, corporations, boards, and PSUs have been instructed to transfer balances, close accounts with the affected banks, and ensure fixed deposits comply with approved terms. Regular reconciliation of accounts and reporting of discrepancies to the Finance Department is mandated, with all processes to be completed by 31 March 2026 and a certified compliance report due by 4 April 2026.

In a regulatory filing under Regulation 30 of the SEBI Listing Regulations, the bank said it identified an incident involving unauthorised and fraudulent activities by certain employees at a specific branch in Chandigarh, potentially involving other individuals and entities.

The issue surfaced after the bank received a request from a department of the Haryana government to close its account and transfer funds to another bank. During the process, discrepancies were observed between the amount mentioned and the balance available in the account.

From February 18, 2026 onwards, other Haryana government entities also engaged with the bank regarding their respective accounts. Differences were noted between the balances in the bank’s records and those cited by the entities.

Based on the preliminary internal review, the matter has been confined to a specific group of government-linked accounts operated through the Chandigarh branch and does not extend to other customers of the branch.

The aggregate amount under reconciliation across the identified accounts is approximately ₹590 crore. The final impact will be determined upon receipt of further information, validation of claims, recoveries including lien marking on fraudulent beneficiary accounts maintained with other banks, liabilities of other entities involved in the transactions and the legal recovery process.

Four suspected officials have been placed under suspension pending investigation. The bank said it will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, in accordance with applicable law.

Also read: IDFC First Bank Q3 Results: Core income grows 12% from last year, asset quality stable

A meeting of the Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds was convened on February 20, 2026, and the matter was placed before it. The Audit Committee and the Board of Directors met on February 21, 2026 to apprise themselves of the developments.

The bank is appointing an independent external agency to conduct a forensic audit. The statutory auditors have been informed, a police complaint has been filed and the bank said it will extend full co-operation to investigating agencies. It has also sent recall requests to certain beneficiary banks to lien-mark balances in suspicious accounts.