In a swift move, without waiting for the outcome of the investigation, fraud-hit IDFC First Bank Ltd. on Tuesday (February 25, 2026) said it had paid out 100% of the principal and interest to the relevant departments of Haryana government as claimed, which worked out to a net amount of ₹583 crore by ‘upholding the highest principles and standards’.
The bank on Sunday (February 22, 2026) disclosed that some of its employees working at its Chandigarh branch had colluded with outsiders to perpetuate a traditional brand fraud amounting to ₹590 crore involving accounts of a Haryana Government department.
“We did not hold up the payment on account of the matter being under investigation. Hence, even though the investigation in the matter is ongoing, we have paid out 100% of the principal and interest ….which works out to a net amount of ₹583 crore,” the bank said in a filing with stock exchanges.
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“The departments have sincerely thanked and appreciated the bank for the positive approach, professional manner, and speedy and principle-based resolution,” it added.
The bank said it would work together with the relevant Haryana Government departments and the law enforcement agencies, to pursue actions against the ‘perpetrators of the fraud’ and ‘look forward to recovering our dues.’
Meanwhile, broking firm Nomura in a report said the amount under reconciliation forms 28% of FY26 profit and 19 bps of the CET-1 ratio, which stood at 14.23% as of Dec. 25.
“The exact impact to the bank’s financials will depend on potential recoveries made through the liens marked on fraudulent beneficiary accounts maintained with other banks, liabilities of entities involved in the transactions and the legal recovery process,” it said.
On its view it said, “While the issue appears localized, it raises concerns around governance and branch-level controls. We await clarity on the quantum of potential loss, recoveries, and provisioning stance.”
“In deposit-linked frauds, banks usually protect depositors and recognize the loss through P&L once the fraud is established, leading to high/often full provisioning, whereas recoveries, if any, are generally back-ended (insurance, asset seizure, third-party liability),” the Japanese brokerage form said.
“Given IDFC First Bank’s retail deposit-led model, reputational perception remains critical, and the stock could remain under pressure until forensic findings and the financial impact are clearly established,” it added.
Motilal Oswal in a report said the impact could potentially dent 4QFY26 Profit Before Tax (PBT) by 56%. “Basis findings and following the due procedures, the bank will look to make necessary provisions in the coming quarter. We believe that in a worst-case scenario assuming negligible recovery, the provisioning requirement will impact 4QFY26 PBT by 56%,” it said.
“We look forward to get more clarity on these developments and potential recovery that may possibly happen as the authorities investigate the matter. We will review our numbers during the 4Q preview and in the interim, we maintain our Neutral rating on the stock,” it added.
In the exchange filing stating that it has high ratings from credit rating agencies, IDFC First Bank said its asset quality has been high and among the best in the industry.
“The last few years have been a phase of building the foundation blocks, and the next few years we expect the operating leverage to reflect in the earnings, it stated.
“As stated publicly, with the MFI (microfinance) situation behind us, we expect to be strongly back in trajectory of profits from FY’27 onwards. We are building a world-class bank in India with strong governance and ethics and will emerge stronger from this incident,” it added.
The bank’s stock on Tuesday gained 1.33% to close at ₹70.97 on the BSE.
Published – February 24, 2026 11:42 pm IST
