IDFC First Bank share price is down nearly 20% after the disclosure of a potential fraud of Rs 590 crore at its Chandigarh branch, which has led to near-term concerns. Nomura, though, maintains a Buy on the stock, pointed out that the amount under reconciliation forms 28% of FY26 profit and 19 basis points of the CET-1 ratio, which stood at 14.23% as of December 2025. It added that the exact financial impact will depend on recoveries and legal proceedings.
The brokerage valued the bank using a two-stage Gordon Growth model at 1.6x Dec-27F BVPS and retained its positive stance even as it cautioned that the fraud disclosure could weigh on near-term sentiment.
Nomura on IDFC First Bank: Fraud at Chandigarh branch
Nomura said IDFC First Bank reported “potential fraud at its Chandigarh branch involving certain employees and specific Haryana government-linked accounts.” The brokerage noted that discrepancies were identified in account balances following a closure and fund transfer request, with “the aggregate amount under reconciliation” at Rs 590 crore.
According to Nomura, “The issue is stated to be confined to identified government accounts and not other branch customers.” The bank has suspended four officials, informed regulators and auditors, filed police complaints, initiated lien marking on beneficiary accounts, and appointed an independent forensic auditor.
On the conference call, Managing Director and CEO V Vaidyanathan said this was “not a digital transaction” and that the bank would “get to the bottom of this” and “spare no one.” He added that KPMG has been appointed for the forensic audit and that the bank will take full support of law enforcement to get to the bottom of the matter.
Nomura said it awaits clarity on “the quantum of potential loss, recoveries, and provisioning stance,” even as the bank has moved to contain the situation through internal action and external investigation.
Nomura on IDFC First Bank: Financial impact and provisioning
Nomura quantified the exposure, stating that “The amount under reconciliation (INR5.9bn) forms 28% of the estimated profit for FY26 and 19 bps of the CET-1 ratio, which stood at 14.23% as of Dec-25.” Converted to Indian numbering, this amounts to Rs 590 crore.
The brokerage said, “The exact impact to the bank’s financials will depend on potential recoveries made through the liens marked on fraudulent beneficiary accounts maintained with other banks, liabilities of entities involved in the transactions, and the legal recovery process.”
It added that in deposit-linked frauds, “banks usually protect depositors and recognize the loss through P&L once the fraud is established, leading to high/often full provisioning, whereas recoveries, if any, are generally back-ended.”
Vaidyanathan told analysts that the bank remains in a fundamentally strong position, with strong capital adequacy and profitability on a positive trajectory. He said operating profit has crossed 2%, the bank holds a strong AAA rating from Crisil, and discussions were held across employees with everyone holding fort well.
Nomura on IDFC First Bank: Governance and sentiment risk
Nomura said, “While the issue appears localised, it raises concerns around governance and branch-level controls.” The brokerage added that the stock could remain under pressure until forensic findings and the financial impact are clearly established.
Given the bank’s retail deposit-led model, Nomura noted that “reputational perception remains critical.” The firm said it is awaiting further clarity on the extent of losses and provisioning.
On the call, Vaidyanathan said the Haryana government account involved represents about 0.5% of total deposits, while overall state-related deposits, including Central and state government accounts, account for 8–10% of total deposits. He added that the bank will see how this localised fraud impacts future government accounts and will take all necessary steps whenever required.
Conclusion
Nomura’s February 23, 2026, note retains a Buy rating on IDFC First Bank with a target of Rs 105, even after the disclosure of a Rs 590 crore potential fraud at its Chandigarh branch. The brokerage said earnings could see pressure depending on provisioning and recoveries.
The management has appointed KPMG for a forensic audit, suspended officials, and sought law enforcement support, while maintaining that the bank remains well capitalised and on a positive profitability path. The near-term focus, as per Nomura’s analysis, will be on forensic findings, recovery prospects, and clarity on the final financial hit.