Mumbai, February 23
The Rs 590-crore fraud involving Haryana government accounts is the result of a collusion between employees of the IDFC Bank and external parties, its Managing Director and Chief Executive V Vaidyanathan said on Monday.
In a specially convened call for investors and analysts ahead of opening of the equity markets, Vaidyanathan said the bank will take some provisions as a result of the fraud and in line with its policies to recognise any stress upfront.
However, the same is unlikely to have a major impact on profits, he said, pointing out that wider net interest margins and credit costs will be of help.
“So, on a standalone basis, we were expecting a very solid Q4 in terms of profitability,” Vaidyanathan said.
The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business after IDFC Bank disclosed Rs 590-cr fraud in haryana government accounts. AU Small Finance Bank has denied any wrongdoing.
Vaidyanathan said the independent forensic audit by advisory firm KPMG is expected to conclude in 4-5 weeks.
“We appointed KPMG only yesterday (Sunday)… typically, to the best of my understanding, these processes could take about 4-5 weeks to conclude,” he said.
The bank has pegged the discrepancy around Rs 590 crore, comprising Rs 490 crore identified following reconciliation and an additional Rs 100 crore that was “self-identified” through internal checks, the MD said, hinting that the amount of Rs 590 crore is unlikely to increase.
“We have put out this number as we could have assessed at this point of time — we don’t anticipate this to broadly move from here on,” Vaidyanathan said.
Recoveries and “employee dishonesty insurance” cover of Rs 35 crore could reduce the impact on the bank, he said.
Describing the episode as a case of “collusion” involving employees and external parties through forged physical cheque transactions, Vaidyanathan said the issue was confined to one branch, one client group, and asserted that there was no system reporting error.
The lender has filed police complaints, informed regulators and auditors, and initiated recovery and lien-marking actions across the banking system, he said.
Vaidyanathan said deposits from the Haryana government account form about 0.5 per cent of the bank’s total deposits, while overall government deposits, including central and state entities, constitute 8-10 per cent of the deposit base.
In the three months ended December 31, 2025, the bank 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.
IDFC First Bank shares were trading 15.58 per cent down at Rs 7,054 apiece on the BSE at 11:15 hrs.
PTI
