IDFC First Bank employees at Chandigarh branch suspected in ₹590 crore fraud involving Haryana govt-linked accounts

Four employees at an IDFC First Bank branch in Chandigarh are suspected to be involved in a ₹590 crore fraud targeting Haryana government-linked accounts, the bank informed the exchanges on 21 February.

As per the filing, IDFC First Bank has identified fraudulent activities by certain employees at a branch in Chandigarh, potentially involving other individuals or entities as well. The aggregate amount under reconciliation across the identified accounts at the particular branch at around ₹590 crore.

In a filing with the BSE, the lender said the fraud was found following a preliminary internal assessment. Impacted customers include a specific group of government-linked accounts within Haryana Government operated through the said branch in Chandigarh, it added.

IDFC First Bank employees involved in fraud: Here's all we know

• As per the filing, the fraud was discovered after the bank received a request from a particular Department of Haryana Government for closure of its account and transfer of funds to another bank.
• “In the process, certain discrepancy was observed in the amount mentioned vis-à-vis the balance in the account,” it stated.
• It added that from 18 February onwards, certain other Haryana Government entities engaged with regard to their respective accounts with the bank; and during this process, differences were observed between the balances in the account and the balances as mentioned by the said Haryana Government entities holding accounts with the bank.

• “Based on the preliminary internal review conducted, the matter is confined to a specific group of government-linked accounts within Haryana Government operated through the said branch in Chandigarh and does not extend to other customers of the Chandigarh Branch,” the filing stated.
• According to the filing, the time of occurrence of the fraud is yet to be determined and will be subject to external independent examination.
• It noted that prima facie, the individuals involved are employed at a particular branch in Chandigarh in a specific set of Haryana State Government Accounts.
• The fraud potentially involves collusion with other individuals or entities or counterparties, it added.
• In terms of impact, the bank said it will determine the details based on further information, validation of claims, and recoveries of any nature.

What action has IDFC First Bank taken so far?

According to the filing, the bank has informed its regulator, filed a complaint with the police and is also in the process of filing further complaints with appropriate law enforcement agencies and reporting to relevant authorities. It added that “full cooperation” will be extended to the investigating agencies.

Meanwhile, the bank added that is also in the process of appointing an independent external agency to conduct an independent Forensic Audit. And has informed its statutory auditors about the fraud.

Internally, the following steps have been taken, it added:

• Four suspected officials have been placed under suspension pending investigation.
• The Bank will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, in accordance with applicable law.
• A meeting of the Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds (SCBMF) was convened on 20 February 20, and the matter was placed before the Committee.
• The meeting of the Audit Committee and the Board of Directors were convened on 21 February 21 to apprise on the matter.
• The Bank has sent recall request to certain beneficiary banks to lien mark balance in suspicious accounts held in these banks.