₹590 Cr Fraud Rocks IDFC First Bank; Shares Hit Lower Circuit at ₹66.85

Shares of IDFC First Bank tumbled nearly 20% on Monday, hitting the lower circuit and an intraday low of ₹66.85, after the lender disclosed a ₹590 crore fraud at its Chandigarh branch, triggering sharp investor concern over governance and internal controls.

The stock witnessed heavy selling pressure in early trade, making it one of the worst-performing banking stocks of the session. The sharp fall followed IDFC First Bank’s disclosure of unauthorised and fraudulent transactions linked to government accounts maintained at its Chandigarh branch.

According to the bank, the fraud involved the misuse of government-linked accounts, where funds were allegedly transferred without proper authorization. The matter came to light after internal checks flagged irregular transactions, following which the bank initiated a detailed investigation.

The lender has informed regulatory authorities and law enforcement agencies, and an internal probe is currently underway to ascertain the full extent of lapses and accountability.

Governance Concerns Spook Investors

The scale of the fraud, pegged at around ₹590 crore, raised serious concerns about branch-level controls, oversight mechanisms, and compliance processes, prompting investors to pare exposure aggressively. Banking stocks are particularly sensitive to governance lapses, and any indication of weak internal controls tends to prompt swift punishment from the market. The stock’s fall to the lower circuit indicated a lack of immediate buying support as institutional and retail investors rushed to exit positions.

The disclosure has also heightened focus on regulatory scrutiny, with investors awaiting clarity on potential penalties, recovery prospects, and the impact on the bank’s financials. While the bank has not yet indicated the full financial hit from the fraud, analysts said markets typically price in worst-case scenarios until more details emerge.

Continued volatility in IDFC First Bank shares is expected in the near term as the investigation progresses. Any further disclosures related to recoveries, employee involvement, or regulatory action could significantly influence stock movement. Until clearer visibility emerges, sentiment around the stock is likely to remain cautious.

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