CHANDIGARH: Private sector lender IDFC First Bank has announced a major update in the widely discussed Chandigarh branch fraud case, stating that the reconciliation of all relevant accounts has now been completed and no further discrepancies have been detected. The bank has paid a total ₹645 crore to claimants affected by the incident, bringing partial closure to the controversy.
In a regulatory disclosure to stock exchanges, the bank said the fraud was initially estimated at about ₹590 crore, but the total payout increased to ₹645 crore after additional claims related to the same incident were received. According to the bank, the additional payment pertains to claims connected to the same branch and the same event, and is not linked to any new fraud or separate incident.
Shockwaves in markets and among investors
The fraud, which came to light toward the end of February, triggered concern across the banking sector and among investors. The development also had an impact on the bank’s share price, leading to heightened scrutiny of internal controls.
The bank clarified that no new claims related to the incident have been received from anywhere in the country since February 25, 2026. This suggests that the scope of the issue was limited and all known claims have now been addressed.
Deposits and liquidity remain stable
IDFC First Bank emphasized that the incident has not affected the stability of its deposit base. According to the bank, total deposits stood at ₹2,92,381 crore as of February 28, 2026, compared with ₹2,91,133 crore as of December 31, 2025, indicating steady growth despite the controversy.
The bank also reported that its average Liquidity Coverage Ratio (LCR) for the ongoing quarter stood at 114%, which it described as a comfortable level. It added that deposits and loan growth are expected to continue broadly in line with historical trends.
How the fraud came to light
The issue surfaced on February 22, 2026, when a government department requested the closure of its bank account and the transfer of funds to another bank. During the process, the bank discovered a mismatch between the balance recorded in its system and the amount reflected in the department’s account records.
Preliminary internal findings indicated that certain employees at the Chandigarh branch were involved in unauthorized and fraudulent activities, allegedly in collusion with external individuals or entities.
During the investigation, authorities identified 391 suspect transactions across about 170 accounts, with the total discrepancy initially estimated at ₹590 crore.
Government departments compensated immediately
After the discrepancy was detected, the bank decided to honour 100% of the claims made by the concerned government departments, including both principal and interest.
The bank said this step was taken promptly to safeguard the financial interests of institutional clients and ensure that no uncertainty or disruption was caused to public funds.
Forensic audit to uncover deeper issues
To investigate the matter in detail, the bank appointed an independent agency to conduct a forensic audit. The audit is expected to reconstruct suspicious transactions, examine the role of employees, identify beneficiary accounts, and detect potential systemic gaps in internal processes.
The bank said legal proceedings against those responsible are continuing and all available legal measures will be pursued to recover the funds involved in the fraud.
A warning for the banking sector
Industry observers say the case serves as an important reminder for the banking system. Even in an era dominated by digital banking and core banking platforms, weaknesses in internal controls can lead to significant financial irregularities.
However, the bank maintains that the reconciliation exercise has now been completed and no additional irregularities have been detected, while steps are being taken to further strengthen monitoring and internal safeguards.
