Drawing a line under the fraud incident at its Chandigarh branch, IDFC First Bank confirmed in a regulatory disclosure that it has paid a total net principal amount of ₹645 crore to all claimants, ₹55 crore more than its initial estimate of ₹590 crore, and that no further discrepancies or pending claims remain. The filing also confirmed that total deposits have remained stable and that the Bank's liquidity position is comfortable.
The update brings partial closure to one of the more unsettling episodes to hit Indian banking in recent months, one that had rattled investors and raised pointed questions about internal controls at the private sector lender.
What Happened at Chandigarh?
On 22 February 2026, IDFC First Bank first disclosed the suspected fraud, following a preliminary internal assessment that identified unauthorised and fraudulent activities by certain employees at its Chandigarh branch, potentially in collusion with external individuals or entities.
The discrepancy came to light in an unusual way. A Haryana government department approached the Bank to close its account and transfer the funds to another institution. During that process, the bank discovered a significant mismatch between its internally recorded balance and the amount that the department believed it held — a gap that triggered an immediate internal investigation.
Investigators subsequently identified 391 suspect transactions spread across around 170 accounts, with the total exposure initially estimated at ₹590 crore. Despite the investigation being in its early stages at the time, the bank immediately honoured 100% of the principal and interest claimed by the relevant departments of the government of Haryana.
IDFC First Bank also appointed KPMG to conduct a forensic audit covering transaction reconstruction, employee involvement, beneficiary account analysis and systemic gaps.
Final Payout: ₹645 Crore
In its 10th March filing, IDFC First Bank confirmed that the final net principal payout to all claimants stood at ₹645 crore, ₹55 crore above the original estimate of ₹590 crore. The Bank was explicit that the incremental amount does not represent a new incident or a new branch. "These claims pertain to the same incident and linked to the same branch and not a new incident," the filing stated. "There are no other pending claims."
The Bank added that no fresh claims have been received from any entity anywhere in the country since 25 February 2026, and that reconciliation of all relevant accounts at the Chandigarh branch has now been completed, with no further discrepancies identified.
The filing described the approach to settlement as reflecting the bank's 'principled approach on this matter of making good the client payments', language that signals the bank chose to prioritise customer protection and reputational containment over prolonged disputes about liability.
Deposits Stable, Liquidity Comfortable
In what will be seen as a reassuring signal to depositors and investors, IDFC First Bank reported that its total deposit base has remained essentially unchanged through the period of the fraud disclosure and its aftermath. Total deposits stood at ₹292,381 crore as of 28 February 2026, up from ₹291,133 crore as of 31 December 2025, a marginal increase that indicates no meaningful deposit flight in response to the fraud news.
The average liquidity coverage ratio (LCR) for the ongoing quarter through 28 February 2026 stood at 114% which IDFC First Bank described as comfortable.
The LCR is a key regulatory metric that measures a bank's ability to meet short-term obligations using high-quality liquid assets. A reading above 100% indicates that the bank holds sufficient liquid assets to cover potential outflows over a 30-day stress period.
"We thank our customers for their understanding that this is an isolated incident linked to one branch in Chandigarh," the filing stated, adding that the Bank anticipates growth in deposits and loans going forward broadly in line with past trends.
Legal Action to Continue
Despite the settlement of claims, the Bank made clear that the matter is far from over on the legal front. The filing confirmed that IDFC First Bank will continue to pursue legal action against those responsible to recover its dues — a process that will run in parallel with the ongoing KPMG forensic audit.
The forensic investigation, which covers transaction reconstruction, employee involvement, beneficiary account analysis, and identification of systemic gaps, is expected to provide the evidentiary foundation for both internal disciplinary action and external legal proceedings. The Bank has not publicly disclosed the names or number of employees implicated, nor the identities of the external individuals or entities alleged to have colluded in the fraud.
The Chandigarh fraud has several dimensions that extend beyond the immediate financial impact on the bank. The involvement of government deposits also adds a public accountability dimension that purely private-sector frauds may not carry.
The relatively swift containment of the crisis, including the immediate full payment to the government of Haryana, the appointment of a reputed forensic auditor and the series of stock exchange disclosures, suggests IDFC First Bank's crisis management response is more proactive than has been seen in some previous banking fraud episodes in India.
Further, the stability of the deposit base through the episode is noteworthy. A net increase of over ₹1,200 crore in deposits between December 2025 and February 2026, even as the fraud was being disclosed and investigated, suggests that retail depositors did not panic, a reflection, perhaps, of the bank's transparent communication and its decision to honour all government claims in full without waiting for the forensic audit to conclude.
The ₹645 crore payout, while significant in absolute terms, represents a fraction of the Bank's total deposit base of nearly ₹2.93 lakh crore. Whether the recovery of dues through legal proceedings will offset a meaningful portion of this loss remains to be seen — but for now, IDFC First Bank appears to have navigated the immediate crisis without lasting damage to its deposit franchise or liquidity position.
What is at stake is the potential loss and its impact on the profitability of the bank . And how the bank has addressed the systemic problem that is the root cause of the issue viz lack of internal controls like monitoring unusual transactions , not following the prepayment confirmation for large payments ( the bank and others are studiously silent on this aspect) and the robust and timely reconciliation confirmations .
Mr Gopalakrishnan’s statement covering the data integrity on the deposit and other numbers need also to be addressed.