IDFC First Bank, AU Small Finance Bank Slump Up to 20% on Rs 590 Crore Fraud Probe

Shares of IDFC First Bank and AU Small Finance Bank tumbled in Monday's early trade after authorities flagged a fraud linked to government accounts. IDFC First Bank fell as much as 20% to a day’s low around Rs 66.85, while AU Small Finance Bank slipped about 7.6% to around Rs 950.50, underscoring investor nerves as regulators probe the case.

Over the weekend, IDFC First Bank disclosed that it identified a fraud of approximately Rs 590 crore involving certain Haryana government-linked accounts operated through a Chandigarh branch. The bank stressed the incident is isolated to that specific group and does not implicate other account holders. An investigation has been initiated, with four officials placed under suspension and the matter referred to the Special Committee of the Board for Monitoring and Follow-up of Cases of Fraud.

In a separate filing, AU Small Finance Bank said it has started an internal review after the Haryana government sought clarification regarding suspicious transactions tied to one account associated with the state’s finance department. As of Feb 21, 2026, deposits from the Government of Haryana were around Rs 538 crore, down from about Rs 735 crore on Feb 17, 2026, spread across roughly 200 accounts (about 0.4% of the bank’s total deposits as of Dec 31, 2025).

Analysts noted the downturn as a negative surprise, with the market reacting to the unfolding disclosures. A market expert highlighted the episode as the first major setback since the bank’s CEO took charge, signaling heightened scrutiny around governance and internal controls. Regulators and the police have been involved, and the fraud case has prompted a broader look at risk controls across both lenders. Investors should monitor official disclosures and regulator updates as investigations proceed.

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