Chandigarh: Private sector lender IDFC Bank Ltd has suspended four of its branch-level employees in connection with the ₹590 crore fraud uncovered earlier this year at its Chandigarh branch, sources told CNBC-TV18. The fraudulent transactions involved unauthorised debits from Haryana government accounts and were detected in February 2026.
Sources confirmed that the suspended employees were allegedly involved in facilitating the fraud and reportedly accepted kickbacks. “The role of these employees pertains to taking alleged kickbacks in facilitating the fraud,” said a source familiar with the investigation. The exact amount of these kickbacks is still being ascertained.
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All four employees are from the same Chandigarh branch and the bank emphasised that the issue is limited to branch-level staff. “This is not an institutional-level problem. The main perpetrators are employees of the branch, not the bank as an institution,” a source added.
Earlier on Friday, IDFC Bank CEO V. Vaidyanathan told CNBC-TV18 in an interview, “We want to be straightforward about this. It is clear that our employees are involved. We are not hiding behind the investigation. Our approach is transparent, which keeps the process clean.” The CEO reiterated that the bank is cooperating fully with authorities to ensure a thorough probe.
The fraud came to light when irregularities were discovered in the processing of government accounts maintained at the Chandigarh branch. The unauthorised transactions, amounting to ₹590 crore, were executed without standard approvals, triggering an immediate internal investigation by the bank’s compliance and risk teams.
Despite the fraud, the bank’s total deposits remained largely unaffected. As of February 28, 2026, IDFC Bank reported total deposits of ₹2.92 lakh crore, up slightly from ₹2.91 lakh crore as of December 31, 2025. Analysts noted that the bank’s prompt response and communication helped maintain customer confidence.
The central investigation and the bank’s internal review aim to identify all parties involved and recover the diverted funds. Sources said that the investigation is ongoing and will also look into the operational lapses that allowed such a high-value fraud to occur at a single branch.
The development has raised concerns about internal controls and governance within private banks handling large government accounts. Experts said the case underscores the importance of robust risk management practices, even at branch levels. “Branch-level staff can sometimes bypass internal checks, which makes it critical for banks to have layered control mechanisms,” said a banking risk analyst.
This incident also comes at a time when regulatory scrutiny of private sector banks has intensified, following a string of high-value frauds in recent years. Analysts believe that IDFC Bank’s quick suspension of the involved employees demonstrates its commitment to maintaining transparency and compliance.
IDFC Bank has pledged full cooperation with law enforcement and regulatory authorities to ensure the matter is resolved efficiently. “We are committed to cleaning up any lapses and ensuring that such incidents do not recur,” said the CEO.
Meanwhile, the bank continues its regular operations, with no disruption to customers or account services. The suspension of employees is considered a precautionary step pending the outcome of investigations.
The case highlights the challenges banks face in balancing growth and governance, especially while handling large-scale government and institutional accounts. The ongoing probe will also be crucial in recovering misappropriated funds and holding those responsible accountable.
