IDFC First Bank Share Price Drops 20% Amid Fraud Scandal
IDFC First Bank is currently facing a significant crisis as its share price plummeted by 20% following the revelation of fraudulent transactions amounting to ₹590 crore at its Chandigarh branch. This alarming incident has raised serious concerns regarding the bank's internal controls and prompted immediate action from the Haryana government, which has de-empanelled the bank from managing government business.
The fraud was discovered when the Haryana government requested the closure of its account with IDFC First Bank and the transfer of funds to another bank. During this process, discrepancies were noticed between the requested amount and the actual account balance, leading to a deeper investigation. The bank acknowledged in a regulatory filing that unauthorized activities appeared to have been carried out by certain employees, specifically related to government accounts.
In response to these findings, the Haryana government issued a circular directing all departments and public sector undertakings to transfer balances and close accounts with IDFC First Bank and AU Small Finance Bank immediately. This decision was influenced by the bank’s failure to comply with fixed deposit instructions, which allegedly resulted in financial losses due to improper account management.
IDFC First Bank's regulatory statement indicated that the estimated fraud amount remains subject to further reconciliation and could change as more information comes to light. The bank has taken initial steps by suspending four officials pending an investigation and has pledged to pursue strict disciplinary actions against those responsible.
Furthermore, the bank is in the process of appointing an independent agency to conduct a forensic audit of the situation. A complaint has been lodged with the police, and the bank has assured full cooperation with all investigating agencies. This crisis comes at a time when the bank's stock has already been under pressure, having seen a 10% drop over the past month and a 4% decrease in the last three months.
The banking sector in India has faced scrutiny over internal controls and compliance measures, especially in light of recent scams and fraud cases. This incident serves as a harsh reminder of the importance of transparency and accountability in financial institutions, where trust and reliability are paramount for customers and investors alike. As investigations continue, stakeholders will be keenly observing the bank's actions and the impact on its reputation.
