Mumbai, Feb 23, 2026, 15:23 IST — Regular session
- IDFC First Bank slipped roughly 16% in afternoon trading, following the lender’s disclosure of a suspected fraud involving accounts connected to the government.
- KPMG has been brought in by the bank to conduct an independent forensic audit on the issue.
- Investors are keeping an eye out for indications that the problem doesn’t spread, along with any new state moves regarding government deposits.
IDFC First Bank shares slid roughly 16% to 69.6 rupees by 2:54 p.m. IST on Monday, hit by news of a suspected 5.9 billion rupee ($65 million) fraud tied to local government entity accounts. The lender confirmed it had started an investigation.
The selloff once again highlights controls at a mid-sized private lender that’s been expanding its franchise, attracting high-profile investors just last year. Some analysts say the incident could weigh on FY26 earnings and prolong governance concerns, with bank stocks lately powering the broader market’s gains.
The bank reported that suspected fraud was confined to a group of Haryana government-related accounts at its Chandigarh branch, uncovered as certain accounts were being closed. It says both the regulator and police have been notified.
The bank, in a Feb. 22 exchange filing, named KPMG as its pick to launch an independent forensic audit. This comes after its earlier statement about bringing in an outside agency to examine transactions and controls in detail.
The Reserve Bank of India on Monday said it doesn’t view the case as a systemic risk — a stance that, according to traders, could help contain broader fallout across the sector, though selling in the stock persists.
Early estimates from brokerages point to a significant blow. UBS figures the losses could equal about 22% of the bank’s net profit for FY26, and Morgan Stanley sees an impact hovering near 20% of profit before tax, reports say.
Macquarie flagged the incident as a potential trigger for closer oversight of government funds held by private banks. The firm also noted that certain balances might shift toward public-sector banks, where the state holds a majority stake.
The Haryana government has removed both IDFC First Bank and AU Small Finance Bank from its list of approved banks for government business, fueling fresh nerves over deposit stability. AU Small Finance Bank pushed back, saying it hadn’t found any evidence of fraud or financial fallout.
Markets saw gains Monday, yet IDFC First’s drop caught attention, putting the stock squarely on the laggard list while main benchmarks advanced.
Technicians point out that what used to be a support zone for the stock now acts as resistance. “Any pullback towards this range is likely to face selling pressure,” said Sachin Gupta at Choice Broking. He also flagged that dropping below 65 rupees could leave the stock exposed to sharper declines. Business Today
Still, everything now rides on the results of that forensic audit—if the bank can prove the issue is limited to just a single branch and a particular group of accounts, that’s key. Recoveries and insurance payouts might cushion the blow, but the timing remains up in the air.
