KPMG forensic review says IDFC First Bank Chandigarh fraud an isolated incident

MUMBAI: Private sector lender IDFC First Bank, in a forensic examination conducted by KPMG, ₹646 crore fraud unearthed at the Chandigarh branch earlier this year was an isolated incident involving collusion between branch employees, customer representatives and third parties.

In a stock exchange filing on Friday, the bank said the findings reconfirmed that the fraud was limited to the Chandigarh branch.

The KPMG investigation, dubbed ‘Project Ultra’, found that the modus operandi involved collusion between branch staff, certain employees of customers and certain individuals outside the bank.

The report revealed that potentially altered/redacted authorization letters, checks (including the misuse of several checks) and confirmation emails were added to transaction receipts by then-branch staff to carry out unauthorized transactions. Signature inconsistencies were also observed in some cases.

“Thereafter, in some cases non-existent Fixed Deposit Advisories (FDA), issued interest certificates and amended bank statements were shared with customers,” he said.

In February, the Warburg Pincus-backed lender said a discrepancy came to light when the Haryana government department tried to close its account and transfer the funds to another bank. The account balance appeared to be different than what the account owner believed it should be.

Mint It had reported in February that it was investigating whether the documents at the center of the alleged fraud at the bank’s Chandigarh branch were real or fake.

The bank said that the net principal amount is approximately 200 million TL ₹646 crore measured in the forensic report was in line with previous statements.

“The bank paid the said amount and applicable interest to the relevant departments and reflected the same in its books of accounts in Q1FY26. The bank is a victim of this financial fraud and is working with the investigating authorities,” the bank said.

According to the lender, records in the Core Banking System (CBS) were accurate and customers were provided with monthly account statements reflecting their balances and transactions and were notified as required through SMS alerts regarding transactions in their accounts when necessary.