IDFC First Bank Shares Experience Mild Rebound Following Steep Decline Amid Fraud Fallout Concerns

IDFC First Bank Sees Modest Rebound After Fraud Disclosure

Shares of IDFC First Bank edged higher in early trade on Tuesday, stabilizing after Monday's sharp selloff. The stock was trading around Rs 70.83, up about 1 percent, after closing nearly 16 percent lower on Monday and hitting a 20 percent lower circuit intraday.

The bank's market capitalization currently stands at over Rs 60,000 crore. The modest rebound comes a day after the lender sought to reassure investors that the incident was isolated, confined to a specific set of Haryana government accounts at a single branch in Chandigarh.

IDFC First Bank has sufficient profitability and liquidity buffers to absorb the impact of the fraud, which is estimated to be Rs 590 crore. Brokerage assessments on Monday pegged the potential impact at roughly 20 percent of FY26 profit before tax, but limited to around 1 percent of net worth. UBS and Morgan Stanley flagged a manageable capital impact, while Jefferies said the key risk would be whether the issue spreads beyond the identified accounts.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The Haryana government has since de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect. The bank's affected state government deposits account for about 0.5 percent of its total deposits, and the immediate outflow of around Rs 200 crore was not meaningful relative to its deposit base of over Rs 2.8 lakh crore.

IDFC First Bank has taken several measures to address the issue, including suspending four employees, informing regulators and auditors, filing a police complaint, and appointing KPMG to conduct an independent forensic audit. The lender has also initiated recovery measures, including recall requests to lien-mark balances in suspicious beneficiary accounts at other banks.

Despite the near-term overhang, IDFC First Bank shares remain up about 18 percent over the past year, outperforming the benchmark Nifty 50. RBI Governor Sanjay Malhotra said the central bank was watching developments closely, adding that there was no systemic concern and that banks were well capitalised.