Chief executive V. Vaidyanathan flew to Chandigarh the same day the ₹646 crore fraud at IDFC First Bank's Chandigarh branch became public to meet senior administrative officials and assure them of the bank's commitment to doing the right thing. According to reports from Mint, Vaidyanathan wrote in his letter to shareholders in the bank's annual report for fiscal year 2026 (FY26) that since the matter was serious, he personally flew to Chandigarh the same day and met senior administrative officials. The officials appreciated the bank's swift response and its willingness to accept responsibility where its own employees were involved.
The fraud, discovered in February 2026, involved employees at a single Chandigarh branch colluding with customer representatives and outsiders. As reported by Mint, a forensic review by KPMG, code-named Project Ultra, reaffirmed that the fraud was confined to the Chandigarh branch. The modus operandi involved collusion between branch employees, certain employees of the customers and certain individuals outside the bank. To push through unauthorized transactions, branch staff attached potentially modified authorisation letters, cheques and approval emails to transaction vouchers, with signature inconsistencies seen in some cases. In certain instances, non-existent fixed deposit advices, edited interest certificates and modified account statements were then shared with customers.
The financial cost of the fraud was reflected in the bank's annual results, with net profit for FY26 rising 7% from a year earlier to ₹1,636 crore. According to reports from Mint, Vaidyanathan described this as underwhelming, stating that without the fraud, profit would have been ₹2,119 crore, a 39% increase. The Warburg Pincus-backed lender paid the amount, along with applicable interest, to the departments concerned and recognized the cost in its books in the March quarter of FY26. Core banking records remained accurate throughout the incident.
The bank subsequently conducted a nationwide verification exercise, sending statements of closing balances as of 28 February 2026 to all relevant government and trust, association, society and club account holders across India. As reported by Mint, no other customer reported a discrepancy. The bank has since added controls, including oversight by a centralised team on top of branch-level authorisation, as well as changes to how it communicates with customers. Deposits held firm through the episode, Vaidyanathan said, even as the bank cut savings-account rates around the same time.
