IDFC First Bank shares crash 20% on ₹590cr fraud case
What's the story
Shares of IDFC First Bank, a private lender based in Mumbai, witnessed their biggest single-day fall since March 2020. The stock plummeted by nearly 20% on February 23 after the bank revealed a fraud worth ₹590 crore. The massive decline came as the bank's net profit for the December quarter was reported at ₹503 crore, which is lower than the amount involved in this case.
Market activity
Block deal worth ₹236 crore in early trading
In the early minutes of trading, a block deal saw some 3.17 crore shares of IDFC First Bank changing hands. This represented 0.4% of the total outstanding equity and was worth ₹236 crore. The bank's exchange filing said a Haryana Government department had requested account closure and fund transfer to another bank. Discrepancies were observed during this process, leading to the revelation of the fraud case involving its Chandigarh branch.
Internal action
Forensic audit initiated by KPMG
In light of the fraud case, four officials suspected to be involved have been suspended by IDFC First Bank. The lender has also initiated a forensic audit with KPMG as the external agency. The bank clarified that this issue is limited to one branch and does not affect other customers. It further said the impact of this case would be determined based on further information, claims validation, recoveries of any nature and legal recovery process.
Financial impact
Fraud case higher than bank's net profit for December quarter
The ₹590 crore fraud case is higher than IDFC First Bank's Q3 net profit and accounts for 0.21% of total deposits and 1.2% of total net worth. Analysts estimate this amount is over 20% of the bank's projected net profit for FY26 and could affect its CET-1 ratio by 18 basis points. The incident may also impact the lender's overall deposit growth trajectory going forward.