KPMG Hired for Forensic Audit of IDFC First Bank ₹590 Crore Fraud

IDFC First Bank told investors it has uncovered suspected unauthorised and fraudulent activity totalling ₹590 crore in Haryana government-linked accounts at its Chandigarh branch, has suspended four officials, filed police complaints and engaged KPMG to carry out an independent forensic audit. One report put the market reaction as a roughly 20% share-price plunge that erased about ₹14,400 crore of market value.

The discrepancy surfaced after a Haryana government department sought to close an account on February 18 and found the balance did not match the bank’s records. Management said a reconciliation showed “there's a discrepancy of 490 crores … we have additionally estimated rupees 100 crores. That's how it comes to a 590 crores of impact which we have put out in the press release.” The bank disclosed the figure to stock exchanges and placed four suspected officials under suspension pending the probe.

IDFC First Bank said the suspected activity involved withdrawals or transfers from specific state government accounts and that “unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals/entities/counterparties.” The bank has asked other banks to freeze or hold funds where money may have been transferred and has initiated lien marking on beneficiary accounts to prevent further withdrawals.

Haryana’s finance department moved to de-empanel IDFC FIRST Bank and AU Small Finance Bank from handling government business immediately, and the bank has told regulators and police it will pursue “strict disciplinary, civil, and criminal action” against employees and others. KPMG’s mandate is to carry out an independent forensic audit “to find out exactly what happened and who was responsible,” with the audit expected to clarify the nature and extent of the irregularities.

Management sought to reassure investors on the bank’s capacity to absorb losses, with MD & CEO V Vaidyanathan saying the bank has “high liquidity buffers and strong profitability metrics to absorb the impact” and that “the incident will pass through the profit and loss account, but the bank is fundamentally in a strong position to absorb it.” Management also noted potential recoveries, saying “We could also get recoveries through these accounts. The legal process could itself establish and validate some of these claims.” Broadly, a broadcast transcript flagged the ₹590 crore as amounting to about 28 percent of an FY26 estimated profit and placed the bank’s December quarter profit near ₹53 crore for context.

The Reserve Bank of India is monitoring the matter; RBI Governor Sanjay Malhotra said, “We do not comment on any individual bank or regulated entity. We are watching the developments. There is no systemic issue.” With KPMG’s forensic audit under way and police investigations pending, key unknowns remain: the identities of the suspended officials, any recoveries to date, the audit timetable and the final accounting treatment once legal and recovery actions are complete. The forensic report and subsequent police findings will determine whether the ₹590 crore figure is final and what disciplinary, civil or criminal outcomes follow.