Bank stock crashes 20% after disclosing ₹590 Cr fraud at its Chandigarh branch

Synopsis:- A leading private lender’s stock plunged 20% after disclosing ₹590 crore fraudulent transactions at its Chandigarh branch involving government accounts. While management said the issue is isolated, the amount exceeds a recent quarterly profit figure, prompting mixed brokerage reactions and cautious investor sentiment.

The shares of the prominent private bank plummeted drastically up to 20 percent in today’s trading session after the company reported unauthorized and fraudulent activities of Rs 590 crore.

With a market capitalization of Rs 57,614.59 crore, the shares of IDFC First Bank Ltd were trading at Rs 66.95 per share, decreasing around 20 percent as compared to the previous closing price of Rs 83.56 apiece.

Fraudulent Transactions

The shares of IDFC First Bank Ltd have seen bearish movement after the disclosure of unauthorized and fraudulent transactions amounting to Rs 590 crore involving Haryana government accounts at its Chandigarh branch. The bank has launched an internal investigation, suspended the employees suspected to be involved, and appointed KPMG to carry out an independent forensic audit.

Further, the issue is confined to the bank’s Chandigarh branch, and management clarified that other customers remain unaffected. However, the exposure is significant, especially when compared to the bank’s December quarter net profit of  Rs 503 crore. The final financial impact will depend on claim validation, recoveries, and the outcome of the legal process.

Moreover, during the concall, IDFC First Bank’s management stated the fraud is limited to a single branch, with  Rs 590 crore being the best-case estimate and unlikely to change. MD & CEO V. Vaidyanathan emphasized this was a physical, not digital, incident and highlighted strong internal controls. He added that the bank remains fundamentally sound, with improving NIMs and declining credit costs ahead.

Brokerages have shared mixed views on IDFC First Bank following the recent development. Investec trimmed its target to  Rs 92 from  Rs 105, reflecting caution, while Jefferies retained its “buy” rating with a  Rs 100 target, urging stronger operational controls and clarity. Overall sentiment remains moderately positive, as 18 of 29 analysts maintain a buy rating despite near-term concerns.

The company delivered a solid financial performance in Q3FY26, with interest income rising 11% year-on-year to  Rs 10,417 crore. More impressively, net profit surged 48% to  Rs 503 crore from  Rs 339 crore a year ago. The sharp jump in profitability reflects improved margins, better asset quality, and stronger operating efficiency.

IDFC First Bank Ltd is a leading private sector bank in India, formed after the merger of IDFC Bank and Capital First. The bank offers retail banking, corporate banking, and wealth management services. It has built a strong retail-focused franchise with growing deposits, improving profitability, and a nationwide branch network.

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