Shares of IDFC First Bank closed at Rs 70.09 apiece on Monday. Earlier during the day, the stock crashed 20% to briefly hit the lower circuit at Rs 66.80 apiece, marking the lowest level since early June last year.
Top 5 single-day declines for IDFC First Bank shares:
On a closing basis, today’s 16% plunge marks the worst single-day drop for IDFC First Bank shares in nearly six years. Earlier on March 12, 2020, the shares of the company dropped 17% to close at Rs 27.60 apiece.
The stock saw a significant decline that month at the onset of the COVID-19 pandemic, falling another 13% on March 19, 12% on March 23 and nearly 11% on March 16, 2020. Later on February 24, 2022, the bank’s shares fell more than 10%.
Why did IDFC First Bank shares crash today?
IDFC First Bank on Saturday said it has identified an incident of alleged fraud by some employees at one of its Chandigarh branches, involving accounts related to the Haryana government. The lender had received a request from one of the departments of the Haryana government to close its account and transfer funds to another bank. While reviewing the request, it found some discrepancies in the amount mentioned against the balance in the account.
The bank added that since February 18 this year, certain other entities of the state government have engaged with regard to their respective accounts. “During this process, differences were observed between the balances in the account and the balances as mentioned by the said Haryana Government entities holding accounts with the Bank,” it added.
According to the bank, the aggregate amount under reconciliation across these accounts at the branch stands at approximately Rs 590 crore. “The impact may be determined based on receipt of further information, validation of claims, recoveries of any nature, including those made through the process of marking lien on fraudulent beneficiary accounts maintained with other Banks, liabilities of other entities involved in the fraudulent transactions, and the legal recovery process,” it added.
Also Read | IDFC First Bank fraud: How a Rs 590 crore hit erased Rs 14,000 crore in investor wealthIDFC First Bank has put four suspected officials on suspension pending investigation. It said that it will pursue strict disciplinary, civil and criminal action against the employees and other external individuals as per the law. The bank has also filed a police complaint and sent a recall request to certain beneficiary banks to “lien mark balance in suspicious accounts held in these banks”.
IDFC First Bank appoints independent forensic auditor:
It said that based on the preliminary internal review, the incident is confined to a specific group of government-linked accounts which operated through the said branch. It added that it does not extend to the other customers of the branch.
In another exchange filing released on Sunday, IDFC First Bank said that it has appointed KPMG to initiate an independent forensic audit in this matter.
RBI finds no systemic risk:
The Reserve Bank of India (RBI) today said that it sees no systemic risk emerging from the IDFC First Bank fraud case. Addressing a joint press conference along with Finance Minister Nirmala Sitharaman, the central bank’s Governor Sanjay Malhotra said, “We are watching the development, there is no systemic issue.”
The stock closed as the top loser on the Nifty Bank index, which itself closed in the green. The index ended the session 0.15% higher at 61,264.25, with Kotak Mahindra Bank shares leading gains.
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