Shares of India's IDFC First Bank (IDFB.NS), opens new tab slumped as much as 20% on Monday, after the private lender disclosed suspected fraud amounting to 5.9 billion rupees ($65 million) over the weekend, fueling concerns about the potential impact on its earnings. The stock was trading 15.8% lower at 70.29 rupees, its lowest since October 2025, as of 11:46 a.m. IST, and was on course for its worst session in six years. The shares led losses among banks (.NSEBANK), opens new tab. India's benchmark (.NSEI), opens new tab rose 0.35%. Get the latest news from India and how it matters to the world with the Reuters India File newsletter. Sign up here. Advertisement · Scroll to continue
IDFC First Bank, a mid-sized lender, has attracted investments from the likes of Warburg Pincus and Abu Dhabi Investment Authority last year. The Mumbai-based bank has a loan book of 2.79 trillion rupees ($30.8 billion) and deposits of 2.82 trillion rupees. The private lender reported that the suspected fraudulent transactions were limited to government-linked accounts at a branch in Chandigarh city, where discrepancies surfaced after entities related to the northern state of Haryana sought to close accounts and the balances did not match records. The issue came to light a month ago and the banking regulator, the Reserve Bank of India, is aware of the matter, IDFC First's management said in a conference call on Monday. Advertisement · Scroll to continue
The RBI is watching developments at IDFC First Bank, governor Sanjay Malhotra said at a press conference following the central bank's board meet. "There is no systemic issue with the bank," he said. The bank has suspended four employees and appointed KPMG to conduct an independent forensic audit. UBS estimates the suspected fraud amount at about 22% of IDFC First's fiscal year 2026 profit after tax, though it expects the capital impact to be limited to around 1% of the net worth. Morgan Stanley pegs the potential hit to profit before tax at roughly 20%. Jefferies said the lender would need to reassure investors that the issue had not spread to other clients, and added that the matter did not appear to be systemic. IDFC First Bank has said it could make recoveries, including from accounts at other banks.
