After discrepancies surfaced in government-linked accounts at a Chandigarh branch, IDFC First Bank disclosed that employees had been involved in fraudulent activities amounting to Rs 590 crore, prompting suspensions, a police complaint and a forensic audit.
Discrepancies Emerge in Routine Process
The irregularities came to light during what appeared to be a procedural exercise. Beginning Feb. 18, 2026, certain entities linked to the Haryana government approached a branch of IDFC First Bank in Chandigarh regarding their respective accounts. According to the bank, the interactions were related to the closure of accounts and the transfer of funds to another financial institution.
It was during this process that discrepancies were noticed between the balances reflected in the bank’s records and those reported by the government entities. The inconsistencies, the bank said, surfaced as officials compared figures while preparing to move the funds.
The gap between the amounts mentioned by the account holders and the balances in the bank’s system prompted further internal scrutiny. What had begun as a routine administrative procedure soon evolved into a deeper review of transactions linked to a specific set of accounts.
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Fraud Allegations and Scope
In a disclosure filed with stock exchanges, IDFC First Bank said that some employees at its Chandigarh branch had been involved in fraudulent activities totaling Rs 590 crore. The funds were drawn from accounts linked to the Haryana government.
The bank clarified that the suspected activities were confined to a particular group of government-linked accounts operated through the Chandigarh branch. It stated that the matter did not extend to other customers of the branch.
According to the statement, the fraud did not appear to be systemic across the bank’s broader operations but was limited to this specific cluster of accounts. The accounts in question were described as government-linked and operated within the Haryana government’s administrative framework.
The discrepancies were identified only after the Haryana government requested closure of its accounts and the transfer of funds to another bank. During the reconciliation process, certain differences were observed between the amounts cited by the government and the balances recorded in the accounts.
The bank did not elaborate on the mechanism through which the alleged fraud was carried out, nor did it specify over what period the transactions had taken place. It said only that the activities involved employees at the branch and related to these designated accounts.
Immediate Actions: Suspensions and Recall Requests
In response, the bank said it had suspended four suspected officials pending investigation. The employees are under review as the institution pursues further action.
“The Bank will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, in accordance with applicable law,” the lender said in its filing.
A complaint has been filed with police authorities, the bank confirmed, initiating a criminal investigation into the matter. The involvement of law enforcement marks the formal escalation of the case beyond internal disciplinary proceedings.
Additionally, the bank said it had issued recall requests to certain beneficiary banks, asking them to lien-mark balances in suspicious accounts held with those institutions. Such measures are typically intended to prevent further movement of funds while investigations are underway.
The bank did not disclose how much of the Rs 590 crore may have been traced or frozen following these recall requests, nor did it identify the beneficiary institutions involved.
Forensic Audit and Ongoing Review
As part of its response, IDFC First Bank said it was in the process of appointing an independent external agency to conduct a forensic audit. The audit is expected to examine the transactions, identify control lapses and determine the full extent of the irregularities.
The lender described the review as independent, signaling that the assessment would be carried out by a third party rather than internal compliance teams alone.
The sequence of events suggests that the fraud remained undetected until the Haryana government initiated the closure and transfer of funds. The bank’s statement indicated that the discrepancies were observed specifically during the reconciliation of account balances in preparation for that transfer.
The bank emphasized that the matter was limited in scope to the identified government-linked accounts and did not affect other customers at the Chandigarh branch. It has not disclosed whether any regulatory authorities beyond law enforcement have been informed, nor has it provided details on potential financial impact to the bank’s balance sheet.
As the forensic audit proceeds and police inquiries continue, the focus remains on the suspended employees and any external individuals who may have been involved. The bank has said it will take action “in accordance with applicable law,” but has not set a timeline for the conclusion of the investigation.
