IDFC FIRST Bank is navigating a major operational and market crisis following the discovery of a ₹590 crore fraud at its Chandigarh branch. The breach, involving the use of forged cheques and fraudulent authorization letters, has triggered a massive selloff in the bank’s stock, wiping out significant shareholder wealth in a single trading session. The fraud came to light on February 18, 2026, when departments of the Haryana Government requested to close several accounts and transfer funds to other institutions. During the reconciliation process, bank officials identified a sharp discrepancy between the reported government balances and the actual funds held in the accounts. Market Impact and Stock Performance The financial fallout was immediate as markets reacted to the disclosure. On February 23, 2026, IDFC FIRST Bank shares plummeted nearly 20%, hitting the lower circuit at ₹66.85 on the BSE. This represents a staggering decline from the previous close of ₹83.51. The bank's market capitalization has seen a dramatic contraction, falling to approximately ₹60,565 crore. This sharp valuation dip comes at a sensitive time for the lender, which had otherwise reported a net profit of ₹1,525 crore for the 2025 fiscal year. The potential hit of ₹590 crore represents nearly 39% of that annual profit, though the final impact remains under reconciliation. Internal Actions and Investigation The bank has moved to contain the damage by suspending four branch officials suspected of involvement. Preliminary findings suggest the fraud was manual, carried out by branch-level employees in possible connivance with external third parties. To determine the full extent of the breach, the bank is appointing KPMG to conduct an independent forensic audit. Additionally, the bank has filed a formal police complaint and notified the Reserve Bank of India (RBI). Immediate Institutional Consequences The Haryana Government has responded by de-empanelling IDFC FIRST Bank for all state business with immediate effect. New directives now require state departments to park funds primarily in nationalized banks, with private bank accounts requiring special approval from the finance department. Recovery Efforts Recovery measures are currently underway. The bank has issued "recall requests" to various beneficiary banks, asking them to mark a lien on suspicious accounts where the fraudulent funds were allegedly transferred. While the bank maintains a strong capital adequacy ratio of 15.48%, the incident has raised critical questions regarding branch-level oversight and internal control mechanisms. The management has emphasized that the issue is isolated to a specific cluster of government-linked accounts in Chandigarh and does not affect the broader retail or corporate customer base of the branch or the bank’s national network.