Mumbai: IDFC First Bank has said that an independent forensic investigation into the Rs 646 crore fraud detected at its Chandigarh branch has concluded that the irregularities were confined to a single branch and did not affect any other part of the bank’s operations. The findings were presented in a forensic review conducted by KPMG and subsequently reviewed by the bank’s Board of Directors.
The private sector lender informed stock exchanges that the investigation found no evidence of similar fraudulent activity elsewhere in its nationwide network, reinforcing the bank’s earlier position that the incident was isolated rather than systemic.
KPMG forensic review identifies key participants
According to the forensic report, the fraud involved coordinated actions by certain current and former employees at the Chandigarh branch, individuals associated with government department customer accounts, and external parties.
The investigation assessed the net principal amount involved at approximately Rs 646 crore, matching the figures previously disclosed by the bank to regulators and investors.
The findings provide clarity on the scale and scope of the fraud, which had raised concerns among stakeholders after it was first reported.
Importantly, KPMG’s review did not uncover any evidence suggesting that similar practices were taking place at other branches or operational units of the bank.
Bank says it was a victim of the fraud
IDFC First Bank stated that it considers itself a victim of the financial fraud and is fully cooperating with law enforcement agencies and other authorities investigating the matter.
The lender said it has already compensated the affected government departments by paying back the principal amount along with applicable interest. The financial impact of the fraud had already been recognised in the bank’s financial statements for the fourth quarter of FY 2025-26.
The bank emphasised that the incident has not affected its commitment to maintaining transparency and strong governance standards.
Core banking systems remained unaffected
One of the significant findings highlighted by the bank was that its Core Banking System (CBS) remained accurate throughout the period under review.
According to the lender, customer account statements continued to correctly reflect balances and transactions. SMS alerts were also issued wherever applicable under the bank’s existing procedures.
The bank noted that customers retained visibility into their account activities despite the fraudulent actions that occurred within the branch.
This aspect of the investigation is likely to provide reassurance to customers and investors regarding the integrity of the bank’s technology infrastructure.
Nationwide verification exercise conducted
Following the discovery of the fraud, IDFC First Bank launched a nationwide verification exercise covering government and TASC (Trusts, Associations, Societies and Clubs) accounts.
The bank sent both physical and digital account statements reflecting balances as of February 28, 2026, to account holders across the country.
According to the lender, the exercise did not reveal any discrepancies or generate claims from customers outside the Chandigarh branch.
The results of this verification process further strengthened the conclusion that the fraud was restricted to a single location and did not have wider implications across the bank’s operations.
Enhanced controls introduced
In response to the incident, IDFC First Bank has introduced several additional safeguards aimed at preventing similar occurrences in the future.
These measures include:
- Stronger centralised monitoring of branch operations
- Additional authorisation layers for sensitive transactions
- Enhanced customer communication protocols
- Improved technology-driven monitoring systems
- Better detection mechanisms for unusual account activity
The bank said these measures are designed to strengthen operational oversight and reinforce governance standards across its network.
Focus on strengthening governance
The incident has prompted the bank to review and strengthen its internal control framework. While the fraud represents a significant financial loss, the completion of the forensic investigation provides greater clarity regarding its scope and impact.
Industry experts note that isolated fraud cases, while serious, are often viewed differently from systemic failures that affect multiple branches or core banking systems. The KPMG findings suggest the issue was limited to a specific group of individuals operating within a single branch rather than reflecting broader weaknesses across the institution.
Conclusion
The KPMG forensic review has concluded that the Rs 646 crore fraud at IDFC First Bank was confined to its Chandigarh branch and did not extend to other parts of the bank. Having compensated affected government departments and completed a nationwide verification exercise, the lender has now shifted its focus towards strengthening internal controls and governance mechanisms. The findings are expected to provide reassurance to customers, investors and regulators that the incident was isolated and not indicative of a wider operational problem.