A Rs 590-crore fraud linked to Haryana Government accounts has been traced to collusion between certain bank employees and external parties, according to V Vaidyanathan, Managing Director and Chief Executive of IDFC First Bank, reported PTI.
Speaking to investors before markets opened on Monday, Vaidyanathan said the bank will make provisions in line with its policy of recognising stress early. However, he stressed that the impact on overall profits is unlikely to be significant.
“We were expecting a very solid Q4 in terms of profitability,” he said, adding that healthy net interest margins and stable credit costs should provide support.
FORENSIC AUDIT UNDERWAY
An independent forensic audit has been assigned to KPMG. Vaidyanathan said the process is expected to take around four to five weeks.
The bank has estimated the total discrepancy at about Rs 590 crore. Of this, Rs 490 crore was identified during reconciliation, while another Rs 100 crore was found through internal checks. The management does not expect the figure to rise further.
ACTION TAKEN AND FINANCIAL POSITION
The Haryana Government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business. AU Small Finance Bank has denied any wrongdoing.
The bank said the issue was limited to one branch and one client group, involving forged physical cheques. It has filed police complaints and informed regulators.
Deposits linked to the Haryana Government form only about 0.5% of the bank’s total deposits. For the December quarter, the bank reported a 48% rise in net profit to Rs 503 crore, with deposits growing 24% year-on-year.
WHAT WE KNOW SO FAR
The issue first came to light when a Haryana government department asked the bank to close its account and transfer funds. During this process, the bank noticed a mismatch between its records and the department’s figures. This led to a wider internal review.
Over the following days, more Haryana government entities flagged similar discrepancies. An internal assessment showed the irregularities were confined to a cluster of Haryana-linked accounts at the Chandigarh branch.
The bank said the matter does not affect other branch customers. The total suspected amount is around Rs 590 crore, though recoveries, insurance, and legal processes will determine the final impact. Four employees linked to the matter have been suspended, and regulators and law enforcement have been informed.
