IDFC First Bank shares in focus after ₹590 crore fraud; lender says incident confined to one branch

Shares of IDFC First Bank Ltd., the Mumbai-based private lender, will be in focus on Monday, February 23, after it disclosed a fraud worth ₹590 crore on Sunday.

As per its exchange filing, the bank received a request from a Haryana Government department for closure of its account and transfer of its fund to another bank. It was during this process that certain discrepancies were observed in the amount mentioned compared to the account balance.

The matter refers to the lender's branch in Chandigarh. It also clarified that the sum does not affect other customers of the bank and that the impact may be determined based on the receipt of further information, claims validation, recoveries of any nature, and other aspects, including the legal recovery process.

Four officials, suspected in this matter, have been placed under suspension by the lender, pending investigation.

The sum is significant as the lender had reported a net profit of ₹503 crore during the December quarter, meaning that the amount involved is higher than the net profit for an entire quarter.

Two Other Disclosures

In its filing earlier on Sunday, IDFC First Bank had mentioned that it is in the process of appointing an external agency to conduct a forensic audit. In a separate disclosure on Sunday evening, the lender disclosed that it has appointed KPMG to initiate an independent forensic audit in this matter.

IDFC First Bank will also be holding a conference call on Monday, February 23, at 8 AM, to share further updates on this matter.

Why Is This Significant?

Not only is the ₹590 crore sum higher than IDFC First Bank's Q3 net profit, it is 0.21% of the total deposits and 1.2% of the total net worth.

Analysts who have coverage on the stock, believe that the sum is more than 20% of its entire projected net profit for financial year 2026 and could have an impact of 18 basis points to its CET-1 ratio, which is currently at 14.23%.

The incident could also impact the bank's overall deposit growth trajectory, as per analysts. At the end of the December quarter, the lender's Credit-Deposit Ratio (CD) was at 93.9%, which it intends to bring down to the mid-80s.

Shares of IDFC First Bank ended 0.3% higher on Friday at ₹83.25. The stock is trading close to its 52-week high of ₹87, and has gained nearly 40% during the last 12 months.