IDFC FIRST Bank Detects ₹590 Crore Fraud at Chandigarh Branch

New Delhi/Chandigarh: IDFC FIRST Bank has disclosed a significant financial irregularity amounting to approximately ₹590 crore at one of its branches in Chandigarh, involving accounts linked to departments of the Government of Haryana. The bank informed regulators and stock exchanges about the suspected fraud on 21 February after uncovering discrepancies during routine reconciliations. 

According to the bank’s regulatory filing, the matter came to light when a Haryana government department sought to close its account and transfer funds to another bank. During the process, officials noticed that the balance reflected in the bank’s records did not match the amount claimed by the government entity. Similar irregularities were subsequently reported in other Haryana government-linked accounts at the same branch. 

The lender said a preliminary internal assessment identified unauthorised and fraudulent activities carried out by certain staff members at the Chandigarh branch, potentially in collusion with external individuals or entities. However, the bank clarified that the irregularities are confined to a specific group of government-linked accounts and do not extend to other customers of the branch. 

Officials Suspended, Probe Underway

In response to the discovery, the bank has suspended four employees connected with the suspected activities. It has also filed a police complaint and is preparing additional complaints with appropriate law enforcement agencies. An independent external forensic audit will be conducted to determine the full circumstances, the bank said. 

The fraud size — more than the ₹503 crore net profit the bank reported for the October–December quarter of 2025-26 — highlights concerns over internal controls and risk management. The final financial impact will be assessed after completing reconciliation, claims validation, and recovery efforts, including lien marking on suspicious accounts in other banks. 

Government Response and Broader Implications

Following this development, the Haryana government has de-empanelled IDFC FIRST Bank (and AU Small Finance Bank) for government business with immediate effect, directing all departments and organisations to close existing accounts and transfer funds to other banks.

Industry watchers are now closely following the progress of the forensic audit and legal proceedings, as the outcome could have implications for the bank’s reputation, deposit mobilisation, and regulatory scrutiny.