₹590-crore IDFC First Bank fraud leads to ₹1100 crore loss for GoI, ₹340 crore for LIC

IDFC First Bank share price crashed 20% to hit the lowest level since October 2025 on Monday, wiping off millions from investors' wealth, including Life Insurance Corporation and the government of India who are among its top shareholders.

The fall in IDFC First Bank shares followed reports of a ₹590-crore fraud, raising concerns of earnings impact for the lender and greater scrutiny.

IDFC First Bank shares opened at ₹75.16 apiece on the National Stock Exchange (NSE), down 10% compared to the last closing price of ₹83.51. Selling pressure intensified, dragging the private lender’s stock 20% lower to ₹66.80.

IDFC First Bank fraud details

In an exchange filing on Saturday night, IDFC First Bank announced unauthorised and fraudulent activities by certain employees at a particular branch in Chandigarh, where discrepancies surfaced after Haryana state entities sought to close accounts, and balances did not match records.

The amount under reconciliation is approximately ₹590 crore, and is subject to change based on receipt of further information. The company announced that it has suspended four employees and ordered a forensic audit, adding that KPMG has been appointed to conduct an independent forensic audit.

The bank said it could make recoveries, including from linked accounts at other banks.

Simultaneously, the Haryana Government also de-empanelled IDFC First Bank and AU Small Finance Bank from parking of bank deposits.

What could be the impact on IDFC First Bank's financials?

According to a UBS report, cited by Reuters, the suspected amount is at about 22% of IDFC First's fiscal 2026 profit after tax, though it said the capital impact would be limited to around 1% of the bank's net worth.

Morgan Stanley echoed the view, pegging the potential hit to fiscal 2026 profit before tax at roughly 20%, according to the report.

Macquarie analysts, meanwhile, believe there will be greater scrutiny of government deposits in private sector banks, and some deposits could move to PSU banks over the medium term, particularly affecting CASA for all private lenders

Post covid, CASA ratios have been under pressure across the system, having declined 500-600 bps from the peak levels.

IDFC First Bank share crash impact on shareholders

Apart from the impact on the bank's financials, today's price action has significantly hit the wealth of its investors, wiping off over ₹14,300 crore in a single day.

The government of India is one of the biggest shareholders in the lender, holding 666,570,000 shares, 7.75% stake in the company at the end of the December quarter. Based on the day's low of ₹66.80, IDFC First Bank's stock fall wiped out ₹11,13.83 crore from the President of India's portfolio.

Life Insurance Corporation of India's notional loss came in at ₹338.15 crore, according to Mint's calculations. LIC held 202,369,591 shares, or 2.35% stake, in the eight biggest Indian lender as of the last quarter of the fiscal year.

Several other leading insurers like ICICI Prudential Life Insurance and HDFC Life Insurance also faced the heat, losing ₹299 crore and ₹317 crore, respectively based on their December shareholding pattern.

IDFC First has also emerged as a retail favourite over the years, with the small investors holding a 15.06% stake in the bank. Today's fall resulted in a ₹2163 crore erosion from their portfolio wealth.

IDFC First Bank shares: Technical outlook

According to technical analysts, the stock's structure has shifted from bullish to bearish, warranting caution going ahead.

Drumil Vithlani, Technical Analyst at Bonanza, said that IDFC First Bank stock has broken below its crucial support zone of 77–78 with strong volume, and is now trading below all major exponential moving averages — 20, 50, 100, and 200 EMAs — confirming both short-term and long-term weakness.

"The RSI stands at 23.83, significantly below its 14-period average of 48.59, indicating oversold conditions following heavy selling pressure. Immediate support is placed near the recent low around 66–67, a level that has been tested multiple times previously. Resistance is now seen at 77, which will act as a key hurdle for any recovery," Vithlani said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.