IDFC First: received claims, paid net principal INR6.45B

IDFC First Bank has confirmed that it repaid the full principal and interest amount of INR 6.45 billion (approximately $71 million) to the Haryana state government following the discovery of a significant fraud involving government-linked accounts at its Chandigarh branch. The repayment, which includes INR 5.83 billion in principal and accrued interest, was initiated after discrepancies were identified during account closure requests by Haryana's Development and Panchayat Department. According to reports, the department had initially deposited INR 50 crore (INR 500 million) into the bank's accounts in September 2025, with the funds intended for fixed deposits.

The fraud, estimated at INR 5.9 billion (approx. $65 million), involved forged signatures of senior government officials, unauthorized transfers to AU Small Finance Bank, and subsequent diversions to a private company linked to the relationship manager's spouse. IDFC First Bank suspended four employees and reported the incident to authorities, commissioning an independent forensic audit. The bank also filed a police complaint and disclosed the matter to the Bombay Stock Exchange.

The incident has raised concerns about internal controls, with analysts noting potential impacts on the bank's fiscal 2026 earnings. UBS and Morgan Stanley estimate the fraud could reduce pre-tax profits by 20–22%, though capital erosion is expected to remain limited. Shares of IDFC First Bank fell 15% following the disclosure, marking its worst single-session decline in six years. The Haryana government has referred the case to its anti-corruption bureau for further investigation.

IDFC First Bank reported a net profit of INR 408.5 crore in the last quarter of 2025. The bank has not yet disclosed the full financial implications of the fraud.