IDFC First Bank Shares Plunge 20% Following Major Fraud Disclosure
Shares of IDFC First Bank experienced a dramatic collapse on Monday, plummeting to hit the 20% lower circuit limit at Rs 66.85 on the Bombay Stock Exchange (BSE). This severe market reaction was triggered by the bank's disclosure of a substantial fraud amounting to Rs 590 crore at its Chandigarh branch, sending shockwaves through investor circles.
Sharp Decline in Trading Session
During the morning trading session, around 10:25 am, IDFC First Bank Ltd was trading down by 18.84%, representing a loss of 15.73 points, bringing its price to Rs 69.10 on the National Stock Exchange (NSE). On the BSE, the share price fell by 16.50%, dropping 13 points to Rs 69.77. This sharp decline stands in stark contrast to the previous week's performance, where the stock had ended in positive territory, rising 0.64% to close at Rs 83.51 on the NSE.
Details of the Fraudulent Activity
In an official exchange filing, the private sector bank revealed that the suspected fraud involved certain employees who allegedly conducted unauthorised transactions from accounts associated with the Haryana government. The bank has taken immediate action by suspending four officials believed to be connected to the case while an internal investigation is currently underway.
The bank issued a strong statement, declaring, "The bank will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, in accordance with applicable law." This commitment to legal recourse underscores the seriousness with which the institution is treating the matter.
Immediate Response and Investigation Measures
IDFC First Bank has already filed a formal complaint with the police regarding the fraudulent activities. The lender has implemented several protective measures, including:
- Sending recall communications to some beneficiary banks
- Requesting lien marking on balances in accounts flagged as suspicious
- Moving to appoint an independent external agency to conduct a detailed forensic audit of the entire episode
Discovery and Scope of the Irregularities
The issue first surfaced after the Haryana government requested the bank to close its account and transfer the funds to another financial institution. During the reconciliation process, the lender detected significant inconsistencies between its recorded balances and the figures reported by the government bodies.
The situation escalated when multiple Haryana government entities, beginning from February 18, contacted the bank regarding their accounts, leading to the identification of additional mismatches. The bank has emphasised that these irregularities were restricted to a specific group of government-linked accounts operated through the Chandigarh branch and assured that other customers of the branch remain completely unaffected by the incident.
This development represents a significant challenge for IDFC First Bank as it works to contain the fallout from the fraud while maintaining customer confidence and regulatory compliance. The market's reaction reflects investor concerns about governance and risk management practices within the financial institution.
