As soon as the stock market opened on Monday 23 February, IDFC First Bank shares collapsed by 20%. However, later a slight recovery was seen. Despite the tremendous growth in the market, let us know what is the reason for the decline in this private sector bank.
IDFC First Bank Stock Falling: February 23 was a very inauspicious day for the shareholders of private sector IDFC First Bank. As soon as the news of the Rs 590 crore scam came to light, the bank’s stock fell by about 20% in early trade. The share fell to Rs 66.85 on BSE. Due to heavy selling, the market cap of the bank has declined to about Rs 61,000 crore.
Why did IDFC First Bank shares fall?
The bank has revealed that a fraud of Rs 590 crore has taken place in a branch of Chandigarh involving the accounts of Haryana Government. Involvement of some bank employees and other people has been found in this. According to IDFC First Bank, at present the amount of fraud has been estimated at Rs 590 crore. However, the final amount will be finalized after a reconciliation exercise, taking into account further information, validation of claims and potential recovery.
How was the fraud exposed?
According to the bank, a department of the Haryana government was taking banking services with IDFC First Bank. On an unknown date the bank received a request to close the account and transfer the balance to another bank. When this process was started, a huge difference was found between the balance in the account and the amount stated. After this, investigation revealed similar irregularities in the accounts of other units associated with the Haryana government.
What did the investigation reveal?
IDFC First Bank has said that in the initial internal review, the issue has been found to be limited to certain government-linked accounts belonging to the Haryana government. These accounts were operated through the same branch in Chandigarh. The bank says that this fraud has not spread to other customers of the Chandigarh branch. The bank has suspended 4 officers till the investigation of the case is completed. The bank has said that it has informed the banking regulator and the police about this matter. Strict action will be taken against the culprits.