IDFC First Bank Fraud Case: Lender refunds '100%' to govt departments as probe continues

In a swift damage-control move amid an ongoing probe into a Rs 590-crore fraud at its Chandigarh branch, IDFC First Bank has said it has repaid 100 per cent of the principal and interest claimed by Haryana government departments, even as investigations continue.

In a regulatory filing, the private sector lender said it “did not hold up the payment on account of the matter being under investigation.”

Rs 583 crore paid out

The bank said it has paid out “100% of the principal and interest to the relevant departments of Haryana government as claimed, which works out to a net amount of Rs 583 crore”.

The development comes days after the lender disclosed that it had detected a fraud of about Rs 590 crore involving certain Haryana government-linked accounts operated through its Chandigarh branch. The bank had earlier indicated that the fraud was the result of fraudulent activities carried out by some employees at the branch, possibly in collusion with other individuals.

The irregularities reportedly surfaced when a Haryana government department sought closure of its account and transfer of the balance to another bank. During reconciliation, discrepancies were found between the stated and actual balances, prompting a deeper review of other government-linked accounts.

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Haryana Chief Minister Nayab Singh Saini told the state Assembly that nearly Rs 556 crore, including around Rs 22 crore in interest, had been recovered within 24 hours in connection with the case. He added that the entire amount due to various state government departments, boards and corporations had been credited back.

The Haryana Anti-Corruption Bureau has launched a probe into the matter, and four people have been arrested so far. The Chief Minister has also said a committee has been constituted to examine the case in detail and fix accountability.

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Bank underscores financial strength

In its filing, IDFC First Bank sought to reassure investors and depositors about its financial health.

“As of 31st December 2025,” the bank said, its total customer business, which includes loans and deposits, stood at Rs 5,62,090 crore, up 22.6 per cent year-on-year. It reported gross non-performing assets of 1.69 per cent and net NPA of 0.53 per cent, with capital adequacy at 16.22 per cent.

“Currently, this is not entirely reflecting in the net profit of the Bank as the Bank is in investment stage… The last few years have been a phase of building the foundation blocks, and the next few years we expect the operating leverage to reflect in the earnings,” it said.

RBI says no systemic risk

Reacting to the development, Reserve Bank of India Governor Sanjay Malhotra sought to calm nerves, asserting that the issue does not pose broader risks to the banking system.

“We are watching the development, there is no systemic issue here,” Malhotra said on Monday.

He added that banks remain well-capitalised. “Banks have enough capital with them. Capital adequacy is 17 per cent while the requirement is 11.5 per cent,” he said.