Bank staff colluded with outsiders in ₹590 crore fraud case: IDFC FIRST Bank MD

IDFC FIRST Bank Ltd employees had perpetuated a ₹590 crore bank fraud through a traditional method by colluding with external parties using forged physical cheque transactions said the private sector bank’s MD and CEO V. Vaidyanathan on Monday (February 23, 2026), a day after the bank reported the matter to the stock exchanges. However, he said this was an specific isolated case involving one branch in Chandigarh and one client group, a Haryana Government entity and its not systemwide. He said no senior management of the bank was involved in this case and recovery process has been initiated. Four bank staff have been suspended. “Its a case of employee fraud and external parties are involved. The bank has all the system in place but in this case its not an electronic transfer and its not a digital fraud. Its an older, traditional kind of fraud in connivance with employees. It is a case of collusion,” Mr Vaidyanathan told analysts over an investor conference call. He said the bank has initiated necessary steps including police complaint to deal with the matter, a first of its kind in its 10 years history. It has also appointed KPMG as independent forensic auditor to trace the manner in which the fraud was given shape. The report is expected in 4 to 5 weeks he said. Assuring investors and the bank’s customers that proper investigation would be conducted and no one would be spared, Mr Vaidyanathan said the bank was well capitalised to bear this shock. “We will emerge stronger. We are confident about that,” he said. “The bank is well capitalised and profitability is in positive territory. As far as the bank is concerned it is now financially very strong but the magnitude of the issue has disturbed us. We will take provisions for this during this quarter. Despite this hit we will still be profitable,” he emphasized. In other words, one quarter’s profit will go to recoup this loss. The bank has been making a quarterly profit of about ₹500 crore. He said the discrepancy of ₹590 crore comprise of ₹490 crore that was identified after reconciliation and ₹100 crore of ‘self identified’ one through internal checks. He declined to answer the timing of the origin of this fraud which involved multiple fake cheques issued to multiple beneficiaries having accounts in multiple banks. However he said banks are cooperating in the investigation. He said the bank will recover ₹35 crore from Employee Dishonesty Insurance. The fraud came into light when the concerned Haryana Government Department reached out to the bank asking it to close its accounts and transfer funds to another bank. In the process discrepancies were observed and differences were observed between the balances in the accounts and balances as mentioned by the Haryana Government entities holding the accounts. It appears they entities had not issued such forged cheques which were cleared by the bank officials to outsider third party accounts in other banks. Following this news the bank’s stocks fell 20% but closed with a loss of 16.18% at ₹70.04 on the BSE. The Reserve Bank of India (RBI) is also watching the development. RBI Governor Sanjay Malhotra while addressing a press conference in Delhi on Monday said, “There is no systemic issue.” Meanwhile in a fresh development the Haryana Government following the surfacing of this fraud has de-empanelled IDFC FIRST Bank and AU Small Finance Bank. Published - February 23, 2026 02:21 pm IST ### Related Topics banking / economy, business and finance / fraud / investigation