IDFC First: Paid 100% of principal and interest to Haryana

IDFC First: Paid 100% of principal and interest to Haryana

IDFC First Bank Assures Haryana Government of ₹590 Crore Repayment Amid Fraud Investigation

IDFC First Bank has committed to repaying the Haryana state government the full ₹590 crore discrepancy identified in a fraud case at its Chandigarh branch, following a meeting between the bank's management and state officials. The issue emerged when a Haryana government department sought to close its account and transfer funds, revealing a mismatch between the stated balance and the actual account value. The bank has assured the government it will disburse the amount "as soon as possible," with management indicating the payment could occur within days.

The fraud, described as an "isolated incident" by the bank, involved alleged collusion between branch employees and external parties to execute unauthorized transactions through forged physical cheques. Four staff members have been suspended, and a police complaint has been filed. The Reserve Bank of India (RBI) has affirmed there is no systemic risk, with Governor Sanjay Malhotra stating the issue is confined to the affected branch.

IDFC First Bank has engaged KPMG to conduct a forensic audit, expected to conclude in four to five weeks. To prevent future incidents, the bank announced enhanced safeguards, including mandatory digital confirmations for high-value transactions and the deployment of AI for cheque signature verification.

The incident has impacted the bank's stock, which fell 16% on February 23, erasing over ₹11,000 crore in market value. The Haryana government has de-empanelled IDFC First Bank for government business, a move the bank's CEO, V. Vaidyanathan, described as a "natural reaction" from clients.

For depositors, the bank emphasized that customer funds remain secure. The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits up to ₹5 lakh per account, covering savings, fixed deposits, and current accounts. The bank also noted it is well-capitalized to absorb the loss and will recover ₹35 crore through employee dishonesty insurance.

While the repayment process is underway, the bank has prioritized transparency, legal action, and operational reforms to restore stakeholder confidence.