The Municipal Corporation of Chandigarh and Chandigarh Smart City Limited have been hit by a financial scandal of unprecedented proportions, involving the suspected misappropriation of at least Rs 117 crore through forged banking instruments. While the current estimate stands at this figure, senior officials have confirmed that the full extent of the loss remains unknown. A special audit by the Comptroller and Auditor General has been commissioned to establish the final amount and map the depth of what is being described as the largest bank fraud in the history of the Union Territory. The scam centers on accounts held at the Sector 32 branch of IDFC First Bank, involving a sophisticated network of fake fixed deposit receipts and fabricated financial statements.
Investigations into the Missing Millions
The scale of the operation suggests a high degree of technical and administrative coordination between bank employees and public officials. The fraud was initially uncovered in February 2026 after reports of similar irregularities involving Haryana government funds prompted Chandigarh officials to attempt to encash fixed deposit receipts totaling Rs 108.73 crore. Upon approaching the bank, officials were informed that the documents did not exist in the system and were likely counterfeit. Subsequent verification revealed that 11 separate FDRs, which had been presented as live assets during the winding up of Chandigarh Smart City Limited in March 2025, were entirely fraudulent.
A Pattern of Systematic Deception
The timeline of the deception coincides with the transitional period when Smart City records were being handed over to the Municipal Corporation. Investigators believe the fraud involved the creation of shell companies, such as CAPCO Fintech and Sunlive Solar System, to facilitate the illegal transfer of funds. Although IDFC First Bank has already remitted over Rs 121 crore to the corporation’s account following the discovery, the Municipal Corporation has clarified that this payment does not constitute a final settlement. The administration continues to seek recovery of interest and any further unauthorized payments that may be identified during the ongoing reconciliation of all UT accounts.
Broadening Scope and Administrative Fall-out
Legal action has already resulted in the arrest of the former Chief Financial Officer of Chandigarh Smart City Limited, while other high-ranking retired officials have been called to join the investigation. The probe has exposed similar patterns of fraud involving the Chandigarh Renewable Energy Science and Technology Promotion Society at the same bank branch, where approximately Rs 83 crore was siphoned into shell firms. In response to the crisis, Punjab Governor and Chandigarh Administrator Gulab Chand Kataria has ordered a comprehensive audit of all administration accounts. Law enforcement agencies are currently tracing the money trail to identify the ultimate beneficiaries of the siphoned public funds.
