Shares crashed as much as 20%, the steepest fall since March 2020, after the private lender disclosed that employees at its Chandigarh branch had carried out unauthorized transactions in accounts linked to the Haryana state government, creating a deposit balance discrepancy of approximately Rs 590 crore.
Read More: IDFC First Bank shares crash 20% after Rs 590 crore fraud disclosed at Chandigarh branch
The fraud amount eclipses the bank’s Q3 net profit of Rs 503 crore. UBS estimated the suspected amount at roughly 22% of IDFC First’s FY26 profit after tax, though it noted the capital impact would be limited to around 1% of the bank’s net worth. Morgan Stanley pegged the potential hit to FY26 profit before tax at approximately 20%.Jefferies said the bank will need to strengthen operational controls and clarify that the issue has not spread to other clients.
Investec maintained a Buy rating but cut its target price to Rs 92 from Rs 105, noting that the final impact will depend on ongoing investigations, recoveries, and the validation of claims.
Nomura’s Ankit Bihani said the exact impact to the bank’s financials will depend on potential recoveries made through the liens marked on fraudulent beneficiary accounts maintained with other banks, liabilities of entities involved in the transactions and the legal recovery process.
While pointing out concerns around governance and branch-level controls, he said given IDFC First Bank’s retail deposit-led model, reputational perception remains critical, and the stock could remain under pressure until forensic findings and the financial impact are clearly established.
CEO calls it isolated incident
IDFC First Bank Managing Director and CEO V. Vaidyanathan moved quickly to contain the damage, insisting the breach was contained and the result of internal collusion rather than systemic failure.
“The bank has necessary controls in place, including maker, checker and authoriser for clearing cheques or debit instructions from the department,” Vaidyanathan told ET earlier. “We have been in operation for over 10 years and have rolled out over 1,000 branches and have had no such incident before.”
Read More: AU Small Finance Bank shares slide 6% after Haryana govt de-empanels lender
He added: “Prima facie third-party entities are involved in this compromise… The issue is specific to one branch and one client group and is thus an isolated instance. There is no system-level issue.”
Stating that the bank is well capitalised, and profitability is on a positive trajectory because of falling credit costs and expected improvement in net interest margin during the fourth quarter, Vaidyanathan said the financial impact of the fraud should be manageable.
What happened at IDFC?
The trouble surfaced on February 18, 2026, when Haryana state government entities flagged discrepancies between actual account balances and those claimed by account holders. A preliminary internal review confined the matter to a specific group of Haryana government-linked accounts at the Chandigarh branch.
Four suspected branch officials have been suspended. The bank has filed a police complaint, informed statutory auditors, and appointed KPMG to conduct an independent forensic audit. A Special Committee of the Board for Monitoring Fraud Cases met on February 20, followed by a full Audit Committee and Board meeting on February 21.
The bank has also sent recall requests to beneficiary banks to lien-mark balances in suspicious accounts, a move that could partially offset the final loss figure.
The reputational damage extends beyond the balance sheet. The Haryana government has de-empanelled IDFC First Bank, along with AU Small Finance Bank, directing state government departments to close their accounts with both lenders. The move signals a broader loss of confidence in the bank’s ability to handle public funds, adding an overhang that could weigh on institutional business well beyond this single incident.