Mumbai: IDFC FIRST Bank on Friday disclosed a suspected fraud of nearly ₹590 crore at one of its branches in Chandigarh, involving certain government-linked accounts of the Government of Haryana. The private sector lender has placed four employees under suspension and initiated a forensic audit into the matter.
In a regulatory filing under SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, the bank said it identified “unauthorized and fraudulent activities” by certain employees at a specific branch, potentially in collusion with other individuals or entities.
The issue surfaced after the bank received a request from a Haryana government department to close its account and transfer funds to another bank. During the process, discrepancies were observed between the amount mentioned in the request and the actual account balance. Subsequently, from February 18 onwards, other Haryana government entities also approached the bank regarding their accounts, revealing further mismatches in reported balances.
The lender said the aggregate amount currently under reconciliation across the identified accounts stands at approximately ₹590 crore. However, it clarified that the final financial impact will depend on validation of claims, recovery from fraudulent beneficiary accounts, lien markings across other banks, and legal proceedings.
Importantly, the bank stated that the matter is confined to a specific group of Haryana government-linked accounts operated through the concerned Chandigarh branch and does not extend to other customers of the branch.
Immediate corrective steps
The bank convened a meeting of its Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds on February 20. This was followed by meetings of the Audit Committee and the Board of Directors on February 21 to review the developments.
Among the measures announced:
Four suspected officials have been suspended pending investigation.
An independent external agency will be appointed to conduct a forensic audit.
Statutory auditors have been informed.
Complaints have been filed with police authorities.
Recall requests have been sent to beneficiary banks to mark liens on suspicious accounts.
The bank confirmed that it has informed its regulator and is cooperating fully with investigative agencies.
Governance under scrutiny
While the lender did not specify the exact time of occurrence, it said the timeline will be subject to an independent external examination. The disclosure comes amid heightened regulatory scrutiny on internal controls within financial institutions.
The development could put the spotlight on compliance frameworks and monitoring systems within private banks handling government accounts, particularly in high-value public funds.
For now, the bank maintains that the exposure is being reconciled and recovery mechanisms are underway, even as investigations proceed on both internal and criminal fronts.