IDFC First Bank shares plunged sharply on Monday after news of a ₹590 crore fraud surfaced. The stock fell as much as 20 per cent intraday, triggering significant erosion in shareholder wealth, including losses to government and institutional investors.
Stock crashes 20 per cent on NSE
The share opened at ₹75.16 on the National Stock Exchange, about 10 per cent lower than its previous close of ₹83.51. As selling pressure intensified, the price dropped 20 per cent to ₹66.80, marking its lowest level since October 2025.
Due to the steep fall, nearly ₹14,300 crore in market capitalisation was wiped out in a single session.
Chandigarh branch fraud
In an exchange filing on Saturday night, the bank disclosed fraudulent activities by several employees at its Chandigarh branch. The irregularities came to light when certain government institutions in Haryana attempted to close their accounts and discrepancies were detected in recorded balances.
The total suspected fraud amount stands at approximately ₹590 crore. Four employees have been suspended, and a forensic audit has been ordered. KPMG has been appointed to conduct an independent forensic investigation.
The bank stated it will attempt recovery from linked accounts. Meanwhile, the Haryana government has removed IDFC First Bank and AU Small Finance Bank from the panel of banks authorised to hold government deposits.
Brokerages assess financial impact
According to a UBS report cited by Reuters, the ₹590 crore exposure is equivalent to roughly 22 per cent of the bank’s projected net profit for FY2026. However, the capital impact may be limited to about 1 per cent of total assets.
Morgan Stanley estimated that the potential hit to pre-tax profit for FY2026 could be around 20 per cent.
Analysts at Macquarie Group warned that scrutiny of government deposits in private banks could intensify. Some deposits may gradually shift toward public sector banks, particularly affecting CASA balances. CASA ratios across the banking system have already declined by 500–600 basis points from peak levels since the COVID period.
Heavy losses for government and insurers
At the end of the December quarter, the central government held 66.65 crore shares, representing a 7.75 per cent stake. At ₹66.80 per share, the decline translated into an estimated loss of approximately ₹1,113.83 crore for the government.
Life Insurance Corporation of India held a 2.35 per cent stake, equivalent to 20.23 crore shares, resulting in an estimated loss of around ₹338.15 crore.
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ICICI Prudential Life Insurance and HDFC Life Insurance reportedly saw erosion of approximately ₹299 crore and ₹317 crore, respectively.
Retail investors, who collectively hold about 15.06 per cent of the bank’s equity, saw an estimated ₹2,163 crore wiped out from their portfolios during Monday’s sharp correction.
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