IDFC First Bank Shares Plunge After ₹5.9 Billion Suspected Fraud Disclosure

Shares of IDFC First Bank tumbled as much as 20% on Monday after the private lender revealed suspected fraudulent transactions worth ₹5.9 billion ($65 million), triggering concerns over its earnings outlook. The stock was last trading about 15.8% lower at ₹70.29 — its weakest level since October 2025 — marking its steepest intraday fall in six years and leading losses among banking stocks even as the broader market edged higher.

The Mumbai-based bank said the discrepancies were confined to government-linked accounts at a Chandigarh branch, discovered when entities related to the Haryana government attempted to close accounts and found mismatched balances. The issue surfaced about a month ago and has been reported to the Reserve Bank of India (RBI), whose governor stated there is no systemic concern. IDFC First Bank has suspended four employees and appointed KPMG to conduct a forensic audit, while analysts estimate the fraud could reduce fiscal 2026 profits by around 20–22% but have limited impact on capital.

The fallout has extended to the bank’s government business, with Haryana removing IDFC First Bank from its approved list for holding state accounts. AU Small Finance Bank was also removed, though it said there was no evidence of wrongdoing on its part. Analysts warn the episode may lead to tighter scrutiny of government deposits in private banks, although IDFC First Bank noted that Haryana government funds account for only about 0.5% of its total deposits, suggesting the financial impact should remain manageable.

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