IDFC First Bank shares witnessed a significant collapse on February 23, 2026, with the stock price plunging nearly 20% in intraday trading. The sharp sell-off followed the bank’s disclosure of a potential Rs 590 crore fraud at its Chandigarh branch. The stock hit a low of Rs 66.80 before stabilizing near Rs 70.00, marking a 16% decline from its previous close of Rs 83.51. This volatility erased approximately Rs 14,000 crore in market capitalization in a single session. The fraud involves unauthorized activities by certain employees at the Chandigarh branch, specifically targeting accounts linked to the Haryana government. Discrepancies were first noticed when a state department requested an account closure, revealing a mismatch between the entity's records and the bank’s internal ledger. As a result, the Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank from handling state business with immediate effect. New rules now require departments to prioritize nationalized banks for public funds. Financial implications for major institutional investors are substantial. The Life Insurance Corporation of India (LIC) and the Government of India have collectively faced mark-to-market losses estimated at Rs 1,452 crore due to the price crash. The Rs 590 crore amount under reconciliation represents roughly 28% of the bank's projected profit for the 2026 fiscal year. While the management has suspended four officials and appointed KPMG for a forensic audit, the incident has intensified governance concerns regarding branch-level controls. Despite the localized nature of the incident, the Reserve Bank of India is actively monitoring the situation. RBI Governor Sanjay Malhotra stated that while the regulator is watching developments closely, there are no immediate signs of a systemic risk to the broader banking sector. IDFC First Bank maintains that it remains well-capitalized with a Capital Adequacy Ratio of 16.22%. The lender reported a net profit of Rs 503 crore for the December 2025 quarter, reflecting a 48% year-on-year growth before this incident surfaced. Market analysts suggest the stock may remain under pressure until the forensic audit provides clarity on the exact financial impact and recovery potential. The bank has already initiated lien-marking on suspicious beneficiary accounts at other institutions to mitigate final losses.