Haryana Govt funds targeted in Rs 590 cr fraud at IDFC Bank; RBI says 'monitoring developments'
A forensic audit by KPMG has been commissioned and is expected to take 4–5 weeks to conclude. Vaidyanathan emphasised that the fraud was confined to a narrow scope and government deposits affected only a small fraction of the bank’s total deposit base.
IDFC First Bank disclosed a major financial irregularity involving Rs 590 crore linked to Haryana government accounts. The incident has prompted the Haryana government to de-empanel IDFC First Bank, along with AU Small Finance Bank, from handling government business. While IDFC First Bank has acknowledged the fraud, AU Small Finance Bank has denied any involvement.
How the fraud occurred
According to the bank, the fraud was a result of collusion between certain bank employees and external parties. It involved forged physical cheque transactions and was restricted to a single branch and a specific client group. Importantly, the bank emphasised that the issue was not due to any system or reporting error, but rather deliberate misconduct by individuals.
The bank identified Rs 490 crore of the discrepancy during reconciliation, with an additional Rs 100 crore uncovered through internal checks. The bank has registered a police complaint, informed regulators, and is taking steps to recover the funds and mark liens within the banking system.
IDFC’s response
The bank’s Managing Director and CEO, V Vaidyanathan, stressed that the fraud, while significant, is unlikely to have a major impact on overall profits. IDFC First Bank plans to make provisions in line with its policies to recognise the stress upfront. The bank also expects insurance coverage of Rs 35 crore for employee dishonesty to mitigate the impact.
A forensic audit by KPMG has been commissioned and is expected to take 4–5 weeks to conclude. Vaidyanathan emphasised that the fraud was confined to a narrow scope and government deposits affected only a small fraction of the bank’s total deposit base.
Despite the incident, IDFC First Bank reported strong financials for the quarter ending December 31, 2025, with a 48 per cent jump in net profit and a 33 per cent increase in low-cost current and savings deposits.
Watching developments around IDFC fraud, says RBI
RBI Governor Sanjay Malhotra stated on Monday that the central bank is closely monitoring developments related to the Rs 590 crore fraud at IDFC First Bank, adding that emphasised that there is no threat to the broader financial system.
According to the bank, the irregularity is restricted to a specific cluster of government-linked accounts belonging to the Haryana government, all managed through its Chandigarh branch. The bank clarified that the issue is isolated and does not affect other customers at the Chandigarh branch.