Market Brief: IDFC First Bank Sector Alert Shares of **IDFC First Bank** experienced a severe sell-off during early trade on **Monday, February 23, 2026**, as investors reacted to a major internal security breach. The bank’s stock price crashed nearly **20%**, hitting the lower circuit shortly after the market opened. This sharp decline follows the discovery of a **Rs 590 crore** fraud at the bank’s **Chandigarh branch**. The incident involves unauthorized and fraudulent activities linked to a specific group of accounts belonging to the **Government of Haryana**. Key Financial Impact The market valuation of the lender took a massive hit, shedding approximately **Rs 14,438 crore** in a single session. Prior to this event, the bank had maintained a market capitalization of roughly **Rs 71,855 crore**. While the bank recently reported a robust **48%** year-on-year surge in net profit for **Q3 FY26**, analysts warn that the fraud may necessitate significant additional provisions in the coming quarters. This could potentially dampen the bank's near-term earnings growth despite its strong **51.6%** CASA ratio. Government De-empanelment The fallout has escalated beyond the stock market. The **Haryana State Government** has officially de-empanelled IDFC First Bank for all state-level business. A notification issued on **February 18, 2026**, prohibits any further parking, depositing, or transacting of government funds through the lender. This move signals a deep loss of institutional confidence, as state departments are now directed to shift funds exclusively to nationalized banks. Corrective Measures and Investigation The bank has characterized the fraud as an "isolated incident" confined to government-linked accounts at one specific branch. In response, management has initiated the following actions: * **Suspension of four officials** suspected of involvement or negligence. * **Appointment of KPMG** as an independent external agency to conduct a comprehensive forensic audit. * **Police complaints filed** to pursue criminal action against internal and external parties. * **Recall requests sent** to other banks to freeze funds in suspicious beneficiary accounts. The bank is scheduled to hold a stakeholder conference call today, **February 23**, to provide further clarity on recovery efforts and the potential final impact on its balance sheet. Regulatory scrutiny is expected to intensify as authorities investigate how such a discrepancy went undetected during routine reconciliations.