IDFC First Bank Crash: Rs. 590 Crore Fraud Triggers 20% Rout

IDFC First Bank shares plunged on Monday, hitting the 20% lower circuit after the bank revealed suspected fraudulent transactions of about Rs. 590 crore at its Chandigarh branch. The stock opened sharply lower and kept sliding as panic selling set in, touching Rs. 66.85, its lowest level in eight months.

The sudden erosion in market value reflected a familiar market reaction: governance concerns tend to hurt faster than weak earnings.

Routine Request that Exposed a Hole

The irregularities came to light during what should have been a standard process. A Haryana government department asked the bank to close its account and transfer the balance to another account. When officials checked the books, the numbers did not match. That mismatch triggered a deeper probe, which uncovered discrepancies across a cluster of government-linked accounts.

The bank has said the Rs. 590 crore figure is still under reconciliation, and the final financial impact will depend on recoveries, claim verification, and legal action.

Employees Suspended, Forensic Audit on Way

The lender has suspended four officials and lodged a police complaint. It plans to appoint an external forensic auditor to trace the money trail and identify the full chain of accountability. The bank has also approached other banks to mark liens on accounts where the funds may have been diverted.

Also Read: Top Low-Risk Stocks for Stability in 2026

Haryana Snaps Ties, Sends Wider Signal

Within hours of the disclosure becoming public, the Haryana government de-empanelled IDFC First Bank and AU Small Finance Bank from handling government business. Departments have been instructed to withdraw their funds and close accounts. The order not only tightens the pressure on the lender but also signals how quickly institutional trust can evaporate.

Test of Credibility, Not Just Capital

The stock had already been under mild pressure in recent weeks, but the fraud revelation changed the narrative overnight. Although the bank maintains that the issue is limited to a specific set of accounts and does not affect retail customers, the episode has raised broader questions about internal controls.

For IDFC First Bank, the immediate challenge is not just financial recovery; it is restoring confidence among investors, depositors, and government clients.