Investor jitters gripped Dalal Street Monday as IDFC First Bank’s stock tanked 20% to its lower circuit following the unearthing of a Rs 590 crore fraud at the Chandigarh branch. The alleged employee-led swindle targeting Haryana state accounts has ignited a firestorm of regulatory action.
From an opening of Rs 75.16—a 10% dip from Rs 83.51—the shares cratered to Rs 66.80 before clawing back to Rs 70.39, reflecting a 15.71% loss by 11:38 AM.
In its stock exchange notification, the bank detailed fraudulent manipulations in government-linked accounts, suspending four staffers and alerting police and watchdogs. The matter appears isolated but involves possible external accomplices.
Quantifying the blow, broker reports indicate the fraud equals 0.9% of assets and 20% of anticipated FY26 pre-tax earnings, signaling material financial repercussions.
Haryana wasted no time, issuing an official directive to delist IDFC First and AU Small Finance Bank from government dealings. All entities under state purview must halt financial ties, withdraw funds, and shutter accounts promptly.
Flaws in fixed deposit adherence were flagged, including misplacement of term deposit funds into savings accounts, leading to suboptimal interest and state losses. Enhanced oversight now requires strict term compliance, regular bank confirmations, monthly reconciliations, and discrepancy alerts.
Full alignment is due by March 31, 2026, with compliance certification by April 4. This scandal serves as a stark reminder of fraud risks in public fund handling, potentially catalyzing tighter audits and governance reforms across the banking landscape.