IDFC First Bank Shares Plummet 20% Following ₹590 Crore Fraud Disclosure
- Editor
- February 24, 2026
- Banking & Finance, Business, Economy, Finance, Global Business
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CHANDIGARH/MUMBAI – Shares of IDFC First Bank witnessed a dramatic 20% crash on Monday, February 23, 2026, hitting the lower circuit after the lender disclosed a massive ₹590 crore fraud at its Chandigarh branch. The incident has wiped out approximately ₹14,400 crore in investor wealth and triggered a swift crackdown by the Haryana state government.+1
The Catalyst: A Mismatch in Government Accounts
The fraud came to light on February 18, 2026, when a department of the Haryana Government requested to close its account and transfer funds to a nationalized bank. During this process, officials discovered a glaring discrepancy between the balance reflected in the bank’s records and the amount reported by the government entity.+1
Subsequent reviews revealed that funds intended for high-yield Fixed Deposits (FDs) were allegedly retained in lower-interest savings accounts or siphoned off entirely. The bank’s internal assessment indicates that four employees at the Chandigarh branch carried out unauthorized and fraudulent activities, potentially in collusion with external parties.+1
Financial and Market Impact
The scale of the misappropriation has rattled the market, as the ₹590 crore figure exceeds the bank’s entire Q3 net profit of ₹503 crore.
- Stock Performance: Shares tumbled to an 8-month low of ₹66.85, down from the previous close of ₹83.56.
- Profit Erosion: Analysts from UBS and Morgan Stanley estimate the fraud represents approximately 20–22% of the bank’s projected annual profit for FY26.
- Capital Position: Despite the earnings hit, the bank’s MD and CEO, V. Vaidyanathan, assured stakeholders that the capital impact is limited to about 1% of the bank’s net worth and described the incident as an isolated case of internal collusion.
Government and Regulatory Response
The Haryana Government has taken a “zero-tolerance” stance, immediately de-empanelling both IDFC First Bank and AU Small Finance Bank (which faced a separate ₹47 crore discrepancy issue).
- Fund Withdrawal: All state departments, boards, and universities have been directed to close their accounts with these private lenders and shift funds to nationalized banks by March 31, 2026.
- Legal Action: The Haryana Anti-Corruption Bureau has registered an FIR under the Prevention of Corruption Act and the Bharatiya Nyaya Sanhita (BNS).
- RBI Observation: RBI Governor Sanjay Malhotra stated that the regulator is monitoring the situation but sees “no systemic issue,” as the fraud was confined to a specific client group at a single branch.
Recovery Efforts and Next Steps
IDFC First Bank has suspended the four suspected officials and appointed KPMG to conduct an independent forensic audit. To mitigate losses, the bank has sent “recall requests” to various beneficiary banks to lien-mark (freeze) balances in suspicious accounts where the stolen funds were allegedly transferred.+1
Investors remain cautious as the bank works to restore trust in its internal controls. Experts suggest the stock may remain under pressure until the forensic audit provides a clear picture of the total recoverable amount and the full extent of the governance lapse.
