IDFC First Bank’s shares crashed on Monday. At around 10 AM on the BSE, the bank’s stock (IDFC First Bank) slipped 18.39% to ₹68.19 per share. For your information, the bank disclosed a fraud of ₹590 crore at its Chandigarh branch. In a regulatory filing, IDFC First Bank stated that certain employees at its Chandigarh branch were involved in fraudulent transactions amounting to ₹590 crore from accounts linked to the Haryana government. Pending the outcome of an internal investigation, the bank has suspended four officials suspected of involvement.
The State Government Has Severed Ties
The Finance Department of the Haryana government, in an official circular issued on Sunday, February 22, stated that all government bank accounts held with IDFC First Bank and AU Small Finance Bank across the state will be immediately de-empaneled. This step has been taken following the disclosure of the fraud.
According to the state government’s notification, no government funds are permitted to be deposited, invested, or transacted through these two private banks. As per the circular, all departments will transfer their balances from both banks and close the accounts. The state government has sent this circular to all government departments operating in Haryana, as well as to public, private, and small finance banks.
A Complaint Has Been Filed With the Police
According to IDFC First Bank, ‘The bank will take strict disciplinary, civil, and criminal action against the guilty employees and other external parties as per applicable law.’ It has also filed a complaint with the police.
The bank has sent recall requests to some beneficiary banks, demanding that balances in accounts considered suspicious be lien-marked. Additionally, IDFC First Bank is in the process of appointing an independent external agency to conduct a forensic audit to investigate the matter thoroughly.
How Was the Fraud Uncovered?
This fraud was uncovered when the Haryana government requested to close its account and transfer funds to another bank. During this process, a discrepancy was noticed between the balances shown in the bank’s records and the amounts reported by the government entities.
However, the bank has clarified that this fraud was limited to certain government-linked accounts handled through the Chandigarh branch and did not affect other customers of the branch.
