Shares of IDFC First Bank plummeted to their lower circuit on Monday, February 23, 2026, following the lender’s disclosure of a massive ₹590 crore fraud at its Chandigarh branch involving Haryana government accounts.
Investors reacted with panic as the private lender revealed that internal staff may have colluded with outsiders to siphon off funds. This development has led to the immediate de-empanelment of the bank by the Haryana State Government.
The Shocking Disclosure: How the ₹590 Crore Fraud Surfaced
The discrepancy came to light when a department of the Haryana government requested the closure of its accounts and the transfer of funds to another bank. During this reconciliation process, IDFC First Bank officials noticed a significant mismatch between the stated account balances and the actual funds available.
Key highlights of the disclosure:
- Location: The incident is centered at a single branch in Chandigarh.
- Target: Specific accounts belonging to the Haryana government and its associated entities.
- Modus Operandi: Preliminary reports suggest the use of forged cheques and fraudulent authorization letters to facilitate manual transactions.
Market Reaction: IDFC First Bank Hits Lower Circuit
The news triggered a massive sell-off in the Indian stock market. IDFC First Bank shares opened 10% lower but quickly spiraled down to hit the 20% lower circuit at ₹66.85 on the NSE.
- Market Cap Wipeout: The crash erased over ₹14,000 crore in investor wealth in a single morning.
- Low Point: This is the lowest the stock has traded in nearly eight months.
- Volume: Massive sell orders were seen with virtually no buyers at the lower circuit level.
Haryana Government Takes Strict Action
In a swift response to the fraud, the Haryana Finance Department issued a circular de-empanelling IDFC First Bank (alongside AU Small Finance Bank) for all state-related business.
Immediate mandates from the state government include:
- Closing all existing accounts with the bank by March 31, 2026.
- Transferring all public funds to nationalized (public sector) banks.
- A complete ban on parking any new deposits or investments with the lender until further orders.
Bank’s Response: Suspensions and Forensic Audit
IDFC First Bank CEO V. Vaidyanathan has described the incident as an “isolated” one, emphasizing that it does not affect retail customers or other branches.
Steps taken by the bank so far:
- Employee Suspension: Four officials from the Chandigarh branch have been suspended pending investigation.
- Forensic Audit: The bank has appointed KPMG to conduct an independent forensic audit to determine the full extent of the breach.
- Legal Action: A police complaint has been filed, and the bank is working to “lien-mark” (freeze) balances in suspicious beneficiary accounts at other banks.