As a first step, IDFC First Bank on Tuesday said it has paid back 100 per cent of the dues, amounting to ₹583 crore, that departments of Haryana government had claimed from the lender

Over the last four days, IDFC First Bank has seen its shares hitting the lower circuit, Haryana government de-empanelling the bank from undertaking state government business, and the bank appointing KPMG to conduct a forensic audit. All these actions were prompted by the ₹590 crore fraud that the lender faced from just one of its branches based in Chandigarh. businessline explains how did the bank faced material fraud:

What was the modus operandi of fraud?

According to the public statements made by the bank’s management, this was a cheque based fraud, perhaps the oldest in banking industry. While the detailed tactics are pending investigation, forged physical cheques could have been used by the customer who was supposedly acting on behalf of client and manipulated entries may have been made by the bank employees to siphon or transfer funds outside of the Haryana government departments’ bank accounts. The bank’s controls (like maker-checker approvals and SMS alerts) apparently failed to catch these until the discrepancies were noticed. Bank management suspects the client who was supposedly representing State government department acted in connivance with bank employees, who cleared the cheques without extensive vetting.

How was the fraud identified?

The scale of the fraud was identified when certain department of Haryana government sought closure of its deposit account at IDFC First Bank and transfer of remaining funds in the deposit account to other bank. In this process, IDFC First Bank observed certain discrepancy in the amount claimed by the department as against the actual balance in the account. From February 18, 2026 onwards, certain other Haryana government entities engaged with the bank with regard to their respective accounts with the bank. During this process, differences were observed between the balances in the account and the balances as mentioned by the said Haryana government entities holding accounts with the bank. Post review, the bank said the scope of fraud does not extend to other customers of the Chandigarh branch. It is still not clarified over what period did the amount got transferred to other accounts.

What action has the bank taken?

The bank has placed four branch officials on suspension till investigation of the fraud completes. Haryana Chief Minister Nayab Saini said the government will form a high level committee which will identify and punish the perpetrators of this fraud, whether it be bank officials, third party broker or any government department official.

What happens next?

As a first step, IDFC First Bank on Tuesday said it has paid back 100 per cent of the dues, amounting to ₹583 crore, that departments of Haryana government had claimed from the lender. “Even though the investigation in the matter is ongoing, we have paid out 100 per cent of the principal and interest to the relevant departments of Haryana government as claimed, which works out to a net amount of ₹583 crore,” the lender said. The forensic audit by KPMG will provide clarity on the modus operandi of the fraud and identify all parties involved in it.

Published on February 24, 2026