IDFC First Bank shares see mild recovery today after steep selloff prompted by fraud fallout

IDFC First Bank

• IDFC First Bank shares rebound 1 percent after Rs 590-crore fraud
• Bank reports fraud limited to Haryana govt accounts in one branch
• Four employees suspended, KPMG to conduct forensic audit

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Shares of IDFC First Bank edged higher in early trade on Tuesday, stabilising after Monday’s sharp selloff triggered by the disclosure of a Rs 590-crore fraud involving certain employees and Haryana government-linked accounts.

IDFC First Bank stock was trading around Rs 70.83 in early deals, up about 1 percent, after closing nearly 16 percent lower on Monday and hitting a 20 percent lower circuit intraday. At current levels, the bank commands a market capitalisation of over Rs 60,000 crore.

The modest rebound comes a day after the lender sought to reassure investors that the incident was isolated, confined to a specific set of Haryana government accounts at a single branch in Chandigarh, and not systemic. Managing Director and CEO V Vaidyanathan said the impact would pass through the profit and loss account, but stressed that the bank has sufficient profitability and liquidity buffers to absorb the hit.

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Brokerage assessments on Monday pegged the potential impact at roughly 20 percent of FY26 profit before tax, but limited to around 1 percent of net worth. UBS and Morgan Stanley flagged a manageable capital impact, while Jefferies said the key risk would be whether the issue spreads beyond the identified accounts.

The Haryana government has since de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect. The bank said the affected state government deposits account for about 0.5 percent of its total deposits, and the immediate outflow of around Rs 200 crore was not meaningful relative to its deposit base of over Rs 2.8 lakh crore.

IDFC First Bank has suspended four employees, informed regulators and auditors, filed a police complaint, and appointed KPMG to conduct an independent forensic audit. The lender has also initiated recovery measures, including recall requests to lien-mark balances in suspicious beneficiary accounts at other banks.

On Monday, Reserve Bank of India Governor Sanjay Malhotra said the central bank was watching developments closely, adding that there was no systemic concern and that banks were well capitalised.

Despite the near-term overhang, IDFC First Bank shares remain up about 18 percent over the past year, outperforming the benchmark Nifty 50.

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