Behind the ₹590-crore alleged fraud at IDFC First Bank's branch in Haryana

₹590 crore fraud at its Chandigarh branch were genuine or forged, two people familiar with the matter said, even as it has suspended four officials and prepares a forensic audit.The Warburg Pincus-backed lender on Sunday said the discrepancy was discovered when a Haryana government department requested that its account be closed and the funds transferred to another bank—the account balance was found to differ from what the account owner believed it should be. Similar discrepancies were noted when other Haryana government entities engaged with the bank on their accounts.IDFC First told the stock exchanges that it has informed the RBI, filed a complaint with the police and is also in the process of filing further complaints with appropriate law enforcement agencies and reporting to relevant authorities.

It is also in the process of appointing an independent external agency for an independent forensic audit.Out of the ₹590 crore, some amounts were transferred to bank accounts of other government departments, the people said on the condition of anonymity. The money transfers were made after cheques and authorization letters, purportedly from the government departments, were submitted.

However, the genuineness of these documents is yet to be ascertained.“The bank cannot initiate transactions unilaterally; these are based on authorizations from the account holders, but now, the bank will check whether these are fake,” one of the two people cited above said.While IDFC First has suspended four officials, it is not clear if any external person was involved. “Investigations will find out whether there was collusion between bank officials and other individuals,” the person said.