IDFC First Bank shares experienced a sharp 16.18% sell-off on Monday, February 23, 2026, closing at ₹70.04 after hitting an intraday lower circuit of 20%. The plunge follows the discovery of a ₹590 crore fraud at its Chandigarh branch. The incident was triggered by unauthorized transactions involving Haryana government accounts. The fraud came to light when state entities requested to close accounts and transfer funds, revealing significant discrepancies between the bank’s records and actual government balances. The Haryana government has responded by de-empanelling IDFC First Bank and AU Small Finance Bank for all state business with immediate effect. Official circulars now prohibit government departments, PSUs, and local boards from parking, depositing, or investing funds with these institutions. Existing balances must be transferred and accounts closed by March 31, 2026. Market analysts estimate that IDFC First Bank holds approximately ₹19,800 crore in deposits within Haryana, representing nearly 7% of its total deposit base. The de-empanelment creates immediate pressure on the bank's CASA (Current Account Savings Account) ratio, which stood at a healthy 51.6% as of December 2025. The bank’s valuation has taken a significant hit, with the price-to-book (P/B) ratio contracting to approximately 1.3. Heavy trading volume accompanied the crash, with nearly 20 crore shares—about 2.7% of the bank's equity—changing hands in block deals valued at ₹1,390 crore. In response, the bank has suspended four officials and appointed KPMG to conduct an independent forensic audit. This investigation is expected to take four to five weeks to determine the full extent of the internal collusion and potential for fund recovery. Despite the localized nature of the incident, the Reserve Bank of India and the Finance Ministry have clarified that there is no systemic risk to the broader banking sector. However, the event has heightened scrutiny on internal controls for smaller and mid-sized private lenders. For the December 2025 quarter, IDFC First Bank had reported a net profit of ₹503 crore. The fraudulent amount of ₹590 crore exceeds this entire quarterly profit, suggesting that upcoming earnings will likely face significant provisioning and a material impact on the bottom line.