Why Did IDFC First Bank Stock Crash 20% Today, February 23?

Mumbai, February 23: Shares of IDFC First Bank plummeted by 20 per cent during early trade on Monday, February 23, hitting the lower circuit filter as investors reacted to a major fraud disclosure. The stock opened sharply lower and eventually touched an intraday low of INR 66.85, wiping out approximately INR 14,000 crore in investor wealth within hours. The massive sell-off followed the bank's regulatory filing over the weekend, which revealed a suspected fraud of INR 590 crore at its Chandigarh branch involving government accounts.

The IDFC First Bank Chandigarh Branch Fraud Explained

The crisis originated at the bank's Chandigarh branch and primarily involves accounts belonging to the Haryana Government. According to the lender's disclosure to the stock exchanges, the discrepancies came to light when a government department requested the closure of its account and the transfer of funds. IDFC First Bank Fraud News: Staff Collusion Suspected in INR 590 Crore Haryana Govt Account Fraud.

During this process, bank officials noticed a significant mismatch between the balance recorded in the bank's system and the amounts reported by the government entities. A preliminary internal review suggested that certain employees had carried out unauthorised and fraudulent activities, potentially involving forged instructions and manual overrides.

Haryana Government De-Empanels Bank

Adding to the stock's downward pressure, the Haryana Government’s Finance Department issued a circular on February 22, de-empanelling both IDFC First Bank and AU Small Finance Bank from handling government business.

The state has directed all departments and public sector undertakings to:

• Halt all fresh deposits and investments with the bank.
• Transfer existing balances to other authorised banks immediately.
• Close all operational accounts maintained with these institutions.

Analysts estimate that while the fraud amount (INR 590 crore) represents only about 1 per cent of the bank's net worth, the potential outflow of government deposits - estimated at nearly INR 2,000 crore - could impact the bank's low-cost deposit (CASA) ratio in the near term.

Bank and Regulatory Response

IDFC First Bank has maintained that the issue is isolated and "confined to a specific group of government-linked accounts" at the single branch in Chandigarh. The bank has taken the following immediate steps:

Suspensions: Four officials suspected of involvement have been placed under suspension.

Forensic Audit: The bank has appointed KPMG to conduct an independent forensic audit.

Legal Action: A formal police complaint has been lodged, and recall requests have been sent to beneficiary banks to freeze suspicious accounts.

RBI Governor Sanjay Malhotra, speaking at a post-budget briefing in Delhi on Monday, stated that the central bank is monitoring the situation but clarified that there is "no systemic issue" involved, seeking to soothe broader fears about the private banking sector. IDFC First Bank Exposes INR 590 Crore Fraud at Chandigarh Branch Involving Haryana Government Accounts, 4 Officials Under Scanner.

Market Sentiment and Outlook

The 20 per cent crash reflects a "crisis of confidence" rather than a threat to the bank's solvency. Brokerages like Macquarie and UBS noted that while the bank remains well-capitalised, the incident highlights potential lapses in internal controls and governance. Investors are now adopting a "wait-and-watch" approach, looking for the results of the forensic audit to ensure the irregularities are indeed limited to a single branch.

(The above story first appeared on LatestLY on Feb 23, 2026 04:56 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).