IDFC First calls Chandigarh fraud 'isolated' incident, says impact limited

IDFC First Bank says the Rs 590 crore fraud at its Chandigarh branch was an isolated case, suspends staff, appoints KPMG for forensic audit, and asserts it has adequate buffers to absorb the impact

IDFC First Bank on Monday, in a call with analysts, said the Rs 590 crore fraud detected at its Chandigarh branch, involving accounts linked to the Haryana government, was an “isolated” incident arising from alleged collusion between certain employees and external parties, with the employees transferring funds to beneficiaries outside the bank. The bank clarified that the personnel involved have been suspended. Additionally, the regulators and auditors have been informed of the matter, police complaints filed, and other law enforcement agencies are being engaged to investigate the matter. The bank has already engaged KPMG to conduct a forensic audit of the matter.

 

  

Shares of the lender plunged nearly 18 per cent on the BSE due to this incident.

 

Additionally, the bank stated that the discrepancy found was Rs 490 crore, but through reconciliation, it found a further discrepancy of Rs 100 crore, taking the total impact to Rs 590 crore. “We have put out this number as we could best assess at this point of time. But we feel that the number is broadly appropriate to the current situation. We do not anticipate this to broadly move from here on to a great extent,” the bank’s management clarified on the analyst call.

 

Meanwhile, the bank’s senior management said no member of the top leadership was involved in the fraud and asserted that the lender remains well capitalised, with adequate buffers to absorb the impact of the incident.

 

“This is a specific, isolated incident that occurred at one branch with one client group. This is essentially a case where debit instructions were purportedly received from the client, and our personnel — which clearly indicates fraudulent activity to us — processed the entries and transferred the money from the client’s account to certain parties outside the bank,” said V Vaidyanathan, MD & CEO, IDFC First Bank.