A ₹590-crore fraud linked to a branch of IDFC FIRST Bank in Chandigarh has triggered widespread concern among investors, regulators and government authorities, raising fresh questions about internal banking controls and oversight of public funds. The case, which came to light in February 2026, involves alleged irregularities in accounts linked to departments of the Government of Haryana and has led to arrests, a forensic audit and swift administrative action.
The suspected fraud was detected after discrepancies emerged during an attempt by a Haryana government department to reconcile and transfer funds from its account maintained at the bank’s Sector 32 branch in Chandigarh. Officials reportedly found inconsistencies between departmental records and the balances reflected in the bank’s books. Subsequent internal checks indicated that multiple government-linked accounts showed similar discrepancies, leading to a broader investigation.
Preliminary findings from law enforcement agencies suggest that funds were allegedly siphoned off through unauthorised transactions involving forged instruments and irregular cheque clearances. Investigators believe certain former and current branch-level officials may have facilitated the movement of funds without proper authorisation. The alleged diversion is estimated at approximately ₹590 crore, making it one of the most significant single-branch fraud cases reported in recent years.
The Haryana State Vigilance and Anti-Corruption Bureau registered a case and initiated a probe under relevant criminal provisions. Several individuals, including former bank officials and external associates, have been arrested in connection with the investigation. Authorities have indicated that the inquiry is ongoing and that financial trails are being examined to determine the full extent of the alleged wrongdoing and identify all beneficiaries of the diverted funds.
In response to the incident, the Haryana government de-empanelled IDFC FIRST Bank from handling state government transactions and directed departments, boards and public sector undertakings to shift their accounts to other banks. The move was described as a precautionary measure pending the outcome of the investigation. Officials stated that safeguarding public funds remains the government’s priority.
IDFC FIRST Bank, in regulatory disclosures, stated that the issue was confined to a specific branch and a limited set of accounts. The bank said it had initiated an internal review and appointed an independent forensic auditor to examine the matter. Senior management assured stakeholders that the institution’s overall financial position remains stable and that necessary corrective measures have been implemented to strengthen internal controls.
To mitigate the immediate impact, the bank reimbursed the Haryana government for the principal amount involved, along with applicable interest, even as investigations continue. State officials confirmed receipt of the funds, noting that recovery of public money was completed promptly. However, authorities have emphasised that criminal proceedings against those responsible will continue irrespective of restitution.
The market reaction was swift. Shares of IDFC FIRST Bank fell sharply following news of the fraud, reflecting investor anxiety over governance risks and potential reputational damage. While analysts noted that the financial hit may be manageable given the bank’s balance sheet size, concerns were raised about operational oversight at branch levels and the adequacy of internal audit mechanisms.
The episode has reignited debate over the management of government funds parked in private banks and the need for stricter reconciliation protocols. Financial governance experts point out that large-value government accounts require layered verification systems, particularly where cheque-based instruments are involved. The case is also expected to prompt closer scrutiny by regulators regarding risk management frameworks in private sector banks.
As the forensic audit progresses and legal proceedings move forward, the full picture of how the alleged fraud was executed is likely to emerge in greater detail. For now, the ₹590-crore case stands as a stark reminder that even established financial institutions are vulnerable to control failures at operational levels, underscoring the importance of transparency, accountability and robust compliance systems in India’s banking sector.
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Edited by Madhusudhan Reddy
Last Updated on: Thursday, February 26, 2026 11:44 am by News Proton Team | Published by: News Proton Team on Thursday, February 26, 2026 11:44 am | News Categories: Business