Mumbai, February 23
IDFC First Bank on Sunday disclosed a Rs 590-crore fraud committed by its employees and others in accounts held by the Haryana government with the private sector lender.
In a regulatory filing made in the wee hours, IDFC First Bank said it has disclosed the matter to the banking regulator and also filed 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 IDFC First Bank filing said.
At present, it estimated the fraud size at Rs 590 crore and added that a “reconciliation exercise” will determine the final amount based on receipt of further information, validation of claims, and recoveries of any nature.
Providing details of the fraud, it said a Haryana government department had been banking with IDFC First Bank, and the lender received a request for a closure and balance transfer to another bank on an undisclosed date.
“In the process, certain discrepancies were observed in the amount mentioned vis-a -vis the balance in the account,” it said, adding that similar issues were observed in other accounts of Haryana government entities, who engaged with the bank from February 18 onwards.
IDFC First Bank said that a preliminary internal review was conducted, and the matter is “confined to a specific group of government-linked accounts within Haryana Government” operated through the said branch in Chandigarh” and stressed that it does not extend to other customers of the Chandigarh branch.
“The aggregate amount under reconciliation across the identified accounts at the abovementioned Branch is approximately Rs 590 crore,” it disclosed.
Four officials working for the IDFC First Bank have been placed under suspension pending investigation, the bank said, assuring strict disciplinary, civil and criminal action against the employees and other external individuals responsible.
As a recovery measure, IDFC First Bank has sent “recall request” to certain beneficiary banks to “lien mark balance” in suspicious accounts held in these banks, the exchange filing said.
Statutory auditors have been informed, and the bank will also be conducting an independent forensic audit by appointing an independent external agency.
Following the discovery of the issue, IDFC First Bank placed the matter before a “Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds” on February 20, and apprised the audit committee and the board a day later.
The IDFC First Bank scrip had gained 0.72 per cent to close at Rs 83.56 apiece on the BSE on Friday, as against gains of 0.38 per cent on the benchmark.
In the three months ended December 31, 2025, the bank had reported a 24 per cent jump in deposits, including a 33 per cent rise in the share of the low-cost current and savings account deposits. Its net profit had zoomed 48 per cent to Rs 503 crore for the October-December period.
Meanwhile, AU Small Finance Bank has denied any wrongdoing in the alleged fraudulent opening of accounts after Haryana de-empanelled it from undertaking any government business.
The Haryana government has de-empanelled AU Small Finance Bank, along with IDFC First Bank, from undertaking any government business over alleged fraudulent opening of accounts.
AU Small Finance Bank said the accounts in question were opened after completing all necessary KYC checks and authorisations.
“IDFC First Bank and AU Small Finance Bank are hereby de-empanelled for government business in Haryana with immediate effect till further orders,” a circular issued by the finance department of the Haryana government stated.
IDFC First Bank on Sunday disclosed a Rs 590-crore fraud committed by its employees and others in accounts held by the Haryana government with the private sector lender.
AU Small Finance Bank in a filing late on Sunday evening said the government account in question was opened with an initial credit of Rs 25 crore transferred from a large private sector bank and additional credits of Rs 47 crore were subsequently received through multiple transactions from another private sector bank (IDFC First Bank).
Of the total credits received in the government account, Rs 47 crore were transferred to the customer account through 14 transactions, it said.
As per bank’s preliminary findings, it said, all these 14 transactions were initiated by the Haryana government department concerned, and they were duly authorised, and executed in accordance with the instructions provided by the department, in the normal course of business.
The bank maintains a complete audit trail and all details, including account opening forms, KYC documentation, cheques and other transaction instructions, verification call details and supporting records that have been submitted to the government department concerned, it said.
The said account was closed on January 15, 2026, as per instructions from the department and the outstanding balance of Rs 25 crore, along with accrued interest was transferred back to the original large private sector bank.
“Based on available facts at this stage and preliminary review, there is no indication of any financial impact or any fraudulent activity towards the bank,” it said.
The filing further said the bank’s board has been informed and the bank continues its internal review in the matter to ensure a fair and transparent review, certain employees have been placed off duty.
As on February 17, 2026, the bank had total deposits of Rs 735 crore from the Haryana government, which has reduced to Rs 538 crore as on February 21, 2026 across accounts (0.4 per cent of overall deposits as on December 31, 2026), following this de-empanelment, it said.
The bank is committed to strong governance, transparency, and the safeguarding of public funds and it will continue to engage with Haryana for re-empanelment and communicate with all other stakeholders, it added.
PTI
