IDFC First Bank: Fraud Detected in Haryana Government Accounts, Chandigarh Branch

IDFC First Bank has officially disclosed a financial discrepancy involving the accounts of certain Haryana government entities managed at its Chandigarh branch. The matter surfaced during a routine account closure and fund transfer request initiated by a specific government department, while during the reconciliation process, the bank identified a mismatch between the actual balance in the accounts and the figures reported by the government entities. The bank has clarified that the scope of this incident is localized to specific accounts within the Chandigarh branch and doesn't affect the broader customer base.

Discovery of Financial Discrepancies

According to bank officials, the issue came to light when a Haryana government department requested the closure of its account and the transfer of funds to another banking institution, while during the execution of this request, discrepancies were noted in the account balances. Subsequently, from February 18, 2026, other Haryana government entities approached the bank regarding their accounts, where similar differences between the bank's records and the entities' reported balances were observed. The bank immediately initiated an internal review to determine the extent of the financial mismatch and the nature of the transactions involved.

CEO Clarification on Internal Collusion

V. Vaidyanathan, Managing Director and CEO of IDFC First Bank, stated that the incident isn't a result of structural weaknesses or systemic failures within the bank's infrastructure. ' The CEO emphasized that the bank maintains rigorous control mechanisms, including 'Maker, Checker, and Authorizer' protocols, designed to prevent unauthorized transactions. Despite having over 1,000 branches and operating for a decade without such incidents, the bank is now investigating how these internal controls were bypassed in this specific instance at the Chandigarh branch.

Financial Impact and Brokerage Estimates

Global brokerage firms have analyzed the potential financial impact of this fraud on the bank's earnings. According to a report by UBS, the discrepancy could represent approximately 22% of the bank's estimated net profit for the fiscal year 2026. Similarly, Morgan Stanley has estimated the impact to be around 20% of the bank's pre-tax profit. Investec has maintained its rating on the bank's stock but revised the target price downward from ₹105 to ₹92. These estimates are based on preliminary data, and the final financial impact will depend on the findings of the ongoing forensic investigation.

Recovery Measures and Forensic Audit

In response to the detected fraud, IDFC First Bank has initiated recovery procedures by issuing 'recall notices' to other banks where the suspected fraudulent funds were transferred. The objective is to freeze these accounts and recover as much of the capital as possible. Also, the bank has commissioned a forensic audit to conduct a deep-dive investigation into the transactions. A forensic audit involves a detailed examination of digital footprints, deleted data, and communication logs to establish a chain of evidence suitable for legal proceedings, while this process is expected to provide clarity on the methodology used to execute the fraud.

Status of Retail Depositors and Security Protocols

The bank has assured its retail customers that their deposits and accounts remain unaffected by this incident. According to the official statement, the fraud is isolated to specific institutional accounts at the Chandigarh branch. The bank continues to operate its standard security protocols across all other locations. Customers are encouraged to remain vigilant by monitoring their mobile banking alerts and official statements. The bank has committed to cooperating with regulatory authorities and providing updates as the forensic audit progresses. The current focus remains on fund recovery and strengthening internal oversight to prevent future occurrences.