The shares of IDFC First Bank tumbled to 20% on Monday after it revealed ₹590 crore worth of fraudulent transactions at its Chandigarh branch. This fraudulent activity allegedly involved a few of the Bank’s employees. The steep fall triggered a lower circuit, with the stock hitting ₹66.85 which is the lowest level in eight months.
The stock had previously opened at 10% lower but then extended the losses as selling pressure persisted. This reflected concerns of investors over the lender’s internal controls and potential financial impact.
Fraud Uncovered Through Haryana Government Account Review
This issue first surfaced when the government of Haryana requested the closure of certain accounts with the bank and the transfer of funds to another institution. During this process, the bank noticed discrepancies between the stated balances and actual amounts. This prompted an internal review which later uncovered suspected fraudulent activities.
“Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana government accounts and potentially involving other individuals/entities,” the bank said in a regulatory filing.
IDFC First Bank said the ₹590 crore figure is preliminary and may change as reconciliations, claims validation, and recoveries progress. Furthermore, similar discrepancies were observed in other Haryana government-linked accounts since February 18, 2026.
Haryana Government De-Empanels Bank
The Haryana government immediately de-empanelled IDFC First Bank and AU Small Finance Bank from handling state business following this revelation. A Finance Department circular directed all government departments, boards, corporations, and public sector units to close accounts and transfer funds with immediate effect.
The department cited compliance lapses which noted that funds which were meant for higher-yield fixed deposits were allegedly parked in savings accounts. Which lead to lower returns. Departments are now needed to complete reconciliations by March 31, 2026, and submit a certified compliance report by April 4.
Bank Takes Action
Four employees at the Chandigarh branch have been suspended due to pending investigation. The bank is initiating disciplinary, civil, and criminal proceedings against those involved and has appointed an independent external agency for a forensic audit. Moreover, a police complaint has also been lodged, and recall requests have been sent to other banks to mark liens on suspicious accounts.
The bank emphasized that the issue is confined to specific Haryana government-related accounts at the Chandigarh branch and does not affect other customers.
Stock Performance
IDFC First Bank shares have been under pressure in recent months, down 10% in the past month and 4% in the last three months, though they are up 24% over the past year. Monday’s drop leaves the stock more than 13% below its 52-week high of ₹87 hit in January 2026, but well above its 52-week low of ₹52.50 in April 2025.
Investors are closely watching the investigation, with the potential for further market volatility as more details emerge.
