IDFC First Bank Shares Hit 20% Lower Circuit After ₹590 Crore Fraud Disclosure: 10 Key Things to Know
- 23rd February 2026
- 02:00 PM
- 4 min read
Summary
IDFC First Bank shares crashed nearly 20% after the lender disclosed a ₹590 crore fraud involving certain employees at its Chandigarh branch in Haryana government-linked accounts. The bank has suspended officials, informed the RBI and initiated recovery steps. Here are 12 key details.Mumbai | February 23, 2026
IDFC First Bank shares opened sharply lower on Monday and hit the 20% lower circuit at ₹66.85 on the National Stock Exchange after the lender disclosed a ₹590 crore fraud at its Chandigarh branch.
At one point, more than 21 lakh sell orders were pending with no buyers available. The regulatory filing said discrepancies surfaced in Haryana government-linked accounts during an account closure and balance transfer request. The fall has resulted in substantial notional losses for major institutional shareholders, including the Government of India and the Life Insurance Corporation of India (LIC).
Here are 10 key developments regarding the IDFC First Bank fraud case:
1. Magnitude of the Fraud
The bank disclosed that fraudulent transactions amounting to approximately ₹590 crore were uncovered at its Chandigarh branch. The amount exceeds the bank’s reported net profit of ₹503 crore for the third quarter of FY26. The figure is currently provisional and subject to reconciliation.
2. Source of Discovery
The irregularities came to light when a Haryana government department requested account closure and transfer of funds. During processing, the bank detected discrepancies between the account balance and the amount claimed.
3. Scope of Impact
Following the initial discovery on February 18, 2026, similar discrepancies were identified in other Haryana government-linked accounts. The bank clarified that the matter is confined to a specific group of government accounts operated through the Chandigarh branch and does not extend to other customers.
4. Employee Involvement and Disciplinary Action
The bank stated that “prima facie, unauthorised and fraudulent activities” were carried out by certain employees at the branch. Four officials have been placed under suspension pending investigation. The lender said strict disciplinary, civil and criminal action will be pursued against responsible employees and other individuals involved.
5. Reconciliation and Recovery Measures
The ₹590 crore figure is based on preliminary assessment. A reconciliation exercise is underway to determine the final amount after validation of claims and recoveries. As part of recovery efforts, the bank has issued recall requests to certain beneficiary banks and asked them to lien-mark balances in suspicious accounts.
6. Regulatory and Governance Steps
IDFC First Bank has informed the Reserve Bank of India (RBI) and its statutory auditors. A police complaint has been filed. The matter was placed before the Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds on February 20, and subsequently before the audit committee and the board.
7. Government De-empanelment
The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect until further orders. No government funds will be parked or transacted through these banks during this period.
Note: AU SFB has denied any wrongdoing.
8. Financial Impact Context
Market estimates suggest the ₹590 crore exposure is equivalent to roughly 0.9% of the bank’s net worth and about 20–22% of its projected FY26 profit. Analysts indicate that while the capital impact may be limited, investor confidence could be affected in the near term.
9. Management and RBI Response
MD & CEO V. Vaidyanathan described the fraud as an isolated incident involving internal collusion rather than a systemic failure, reiterating that other customer accounts remain unaffected.
RBI Governor Sanjay Malhotra said the central bank is monitoring developments and that there is no broader systemic risk to the banking sector at this stage.
10. Market Capitalisation Impact
The sharp fall in IDFC First Bank shares led to an erosion of over ₹14,000 crore in market capitalisation in a single session. The stock is now trading at its lowest level since mid-2025.
IDFC First Bank Fraud Impact: What Analysts Said
Brokerage estimates suggest Haryana government deposits account for around 0.4–0.5% of IDFC First Bank’s total deposits, while combined state and central government deposits form roughly 8–10% of the bank’s deposit base. Analysts estimate a potential outflow of nearly ₹20 billion following the state’s decision to halt transactions, equivalent to about 0.7% of total deposits.
While the capital impact of the ₹590 crore fraud may remain limited, sustained movement of government deposits could weigh on CASA ratios and funding costs, adding near-term pressure on earnings and sentiment.
With inputs from Moneycontrol, PTI.
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