Shares of IDFC First Bank came under intense selling pressure on Monday after the lender disclosed suspected fraudulent transactions worth about Rs 590 crore at its Chandigarh branch. The revelation triggered panic on Dalal Street, sending the stock to its 20 per cent lower circuit in early trade.
The counter plunged to Rs 66.85, its intra-day low, marking a sharp 20 per cent fall. The stock had opened nearly 10 per cent lower before extending losses as the session progressed. At 10:33 AM, the shares were trading at Rs 70.10, down 16.06 per cent on the day, reported IANS.
The market reaction reflected investor concern over the scale of the alleged irregularities and the potential impact on the bank’s financials.
What The Bank Said
In a regulatory filing, IDFC First Bank stated that the matter is confined to a specific set of Haryana government-linked accounts at its Chandigarh branch. The bank added that it has informed regulators and lodged a police complaint.
“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 state government accounts and potentially involving other individuals/entities/counterparties,” the filing said.
The lender has suspended four officials pending investigation and said further action will follow based on findings.
The bank has not indicated any system-wide issue, describing the matter as branch-specific.
Financial Impact: How Big Is Rs 590 Crore?
Independent brokerage estimates suggest that the suspected fraud amounts to roughly 0.9 per cent of the bank’s net worth and nearly 20 per cent of its FY26 pre-tax profit.
While the percentage of net worth appears relatively contained, the potential hit to profitability is significant. Investors are likely to assess whether the bank will need to make provisions, how quickly recoveries may occur, and whether internal controls will be strengthened.
In banking, even isolated incidents can raise broader questions around governance, risk management and oversight.
Haryana Government Steps In
The fallout extended beyond the stock market. The Haryana government de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect until further orders, according to an official circular.
All departments, boards, corporations and public sector undertakings have been directed to cease deposits, investments or any other financial transactions with the two lenders.
Authorities were instructed to transfer existing balances and close accounts maintained with the banks.
The Finance Department flagged lapses in compliance with fixed deposit instructions. It noted that, in certain cases, funds that were meant to be placed in flexible deposits or higher-interest fixed deposit schemes were allegedly retained in savings accounts. This, according to the department, resulted in lower returns and financial loss to the state.
Departments have now been directed to adhere strictly to approved deposit terms, conduct regular compliance checks, perform monthly reconciliations and report discrepancies promptly.
All reconciliations must be completed by March 31, 2026, with certified compliance reports due by April 4, 2026.
Investor Sentiment And What Comes Next
The sharp sell-off underscores how sensitive markets are to governance concerns in the banking sector. Even though the bank has described the issue as confined to a single branch and specific accounts, investors will be watching closely for further disclosures.
Key questions remain around internal controls, supervisory mechanisms and whether any systemic vulnerabilities could surface during the investigation.
Regulatory scrutiny is also expected to intensify, particularly in relation to government-linked accounts and deposit management practices.
