A routine account-closure request from a Haryana government department has triggered one of the most serious fraud investigations ever reported by IDFC First Bank.
- The case relates to a single bank branch in Chandigarh.
- The alert came when a Haryana department asked the bank to shut its account and transfer the funds elsewhere. While processing that request, the bank realised the amount recorded by the department did not match the balance reflected in its own books. The difference was Rs 490 cr.
- Rs 100 cr is the additional amount that bank claims to have identified at this stage conservatively on its own
- The Haryana government has temporarily suspended all dealings with the bank during the investigation.
- Management has informed that the fraud is a human connivance between bank’s branch officials and some outsiders and is purely physical (like old school frauds) through forged cheque withdrawals.
- four employees linked to the irregularities have been suspended and the matter has been reported to the Reserve Bank of India, law enforcement agencies and statutory authorities.
- Detailed forensic audit has been assigned to KPMG. Scope of the assignment is current being worked out.
- Management expects the entire process to conclude over next 4-6 weeks.
Management claims this to be an isolated case. The bank reiterated that it remains well capitalised and said the ultimate financial hit will depend on how much money can be clawed back and what insurance covers.
However, the large quantum involved and non clarity on the lapses may keep investors cautious.
Bank has paid Rs 645 cr to the clients against this fraud; Rs 55 cr more than the initial estimates.
It claims that it has no more claims outstanding from anyone against this.
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