Shares of IDFC First Bank ended lower on Monday after the Central Bureau of Investigation (CBI) conducted searches at multiple locations linked to an alleged government fund diversion case. The development follows the bank’s recent disclosure that it had received a forensic review report from KPMG regarding the ₹646 crore fraud detected at its Chandigarh branch.
The bank’s stock closed 1.3% lower at ₹71.4 on the BSE after falling as much as 1.7% during intraday trading to ₹71.1 per share.
According to an official statement, the CBI carried out searches at 6 locations across Chandigarh, Panchkula, and Delhi-NCR as part of its investigation into the alleged diversion of government funds belonging to departments of the Haryana government and the Chandigarh administration.
The searches covered premises linked to senior Haryana cadre public servants, as well as Noida-based Vipam Consultancy Pvt Ltd and its director. Investigators stated that evidence gathered during the probe indicates that certain public servants allegedly worked in collusion with bank officials to facilitate the opening of accounts, transfer of funds, and subsequent diversion of money.
In an exchange filing submitted after market hours on Friday, IDFC First Bank said that KPMG’s forensic review reaffirmed that the fraud involved collusion among certain current or former employees of the Chandigarh branch, some state government employees, and certain third parties.
The review also confirmed that the net principal amount involved in the alleged fraud stood at ₹646 crore.
The bank stated that it has already reimbursed the concerned government departments for the principal amount along with applicable interest. The financial impact has been accounted for in the bank’s Q4 FY26 financial statements.
“The Bank is a victim of this financial fraud and is working with investigative authorities,” the lender said in its filing.
IDFC First Bank first disclosed the issue in February after identifying irregularities in accounts linked to the Haryana government at its Chandigarh branch. The matter came to light when a government department requested the closure of its account and transfer of funds to another bank. During the process, the bank discovered discrepancies between the requested transfer amount and the actual balance available in the account, prompting a detailed investigation.
The initial disclosure had a significant impact on investor sentiment, with the stock falling nearly 16% in a single trading session, marking its sharpest one-day decline since March 2020.
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