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Analyst Meet / AGM
23-Feb-26
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Conference Call
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IDFC First Bank
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Expects bottomline to remain positive in Q4FY26, despite provisioning hit for fraud incident
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IDFC First Bank conducted a conference call on 23 February 2026 to discuss recognition of a incident of fraud at a branch in Chandigarh. V. Vaidyanathan, MD&CEO of the bank addressed the call:
Highlights:
The bank has identified an incident involving unauthorized and fraudulent activities by certain employees at a branch in Chandigarh and potentially involving other individuals / entities/ counterparties.
The bank received a request from a Department of Haryana Government for transfer of funds to another bank. In the process, certain discrepancy were observed in the amount mentioned against the balance in the account.
The matter is confined to a specific group of government-linked accounts within Haryana Government operated through a branch in Chandigarh and does not extend to other customers.
The aggregate amount under reconciliation across the identified accounts is approximately Rs 490 crore, while the bank is estimating additional impact of Rs 100 crore leading to overall impact of Rs 590 crore. The bank does not expect any further impact from the incident.
The final impact may depend on validation of claims, recoveries of any nature including those made through the process of marking lien on fraudulent beneficiary accounts maintained with other Banks, liabilities of other entities involved in the fraudulent transactions, insurance claims and the legal recovery process.
Four suspected officials have been placed under suspension pending investigation.
No senior management is involved.
The bank has acted swiftly. The bank has appointed KPMG for forensic audit and the report is expected in four to five weeks.
The fraud is physical in nature through cheques and its not a digital fraud. The incident is also isolated and linked to a particular branch and a client.
The funds were transferred fraudulently to the beneficiaries outside the bank.
As per the bank, the credit cost is reducing and margins are improving. With the improving operating profit, the bank is well positioned to subsume the provisioning impact on bottomline in Q4FY2026. The bank expects the bottomline to remain positive, despite the provisioning hit for the fraud incident.
The bank expects the NIMs to improve to 5.8% in Q4FY2026.
The operating profit to asset ratio has improved to 2.0% and the bank expects it to further improve to 3.5% ahead.
The bank is in full control and expects the transactions to happen smoothly.
On the recovery front, the bank has sent recall request to certain beneficiary banks to lien mark balance in suspicious accounts held in these banks. The recovery may be possible up to the amount which has not left the system.
Haryana government entities have recently withdrawn Rs 200 crore from the bank. The deposits relating to Haryana government amounts to 0.5% of the total deposits.
The overall government accounts related deposits stand at 8-10% of the total deposits in line with the industry level.
The bank has reduced saving account deposits rates and there is no impact on inflow of new deposits.
The bank is planning to bring additional controls for high value transactions. However, there is no need to incur additional cost for this.
The bank has employee dishonesty insurance of Rs 35 crore.
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