The stock market kicked off the week with a dramatic upswing. As soon as the Sensex opened, it surged over 600 points, surpassing the 83,000 mark, while the Nifty raced ahead at an incredible pace. Yet amidst this market fervor, the shares of IDFC First Bank appeared to be in a downward spiral. Yes, following the revelation of a ₹590 crore fraud, IDFC First Bank's shares crashed as the trading commenced on Monday, causing a stir among investors as prices plunged by approximately 20%.
A Sudden Price Drop:
Focusing on the drop in IDFC First Bank's share price, it opened at ₹75.16 in early trading, a sharp descent from its previous close, and quickly spiraled down to ₹66.80, hitting the lower circuit limit - marking a substantial 20% decline. This slump led to the IDFC First Bank's market capitalization dropping to ₹50,330 crore. Compared to the last trading day, this represents a significant decrease in market cap, with investors witnessing a wipeout of over ₹14,000 crore.
The Cause Behind the Crash?
The reason for the plunge is evidently a major fraud uncovered within IDFC First Bank, reportedly amounting to ₹590 crore. According to reports, the bank revealed that this fraud is linked to accounts operated by the Haryana Government through the bank's Chandigarh branch. In response to the fraud's exposure, the bank has suspended four officers.
How the Fraud Was Exposed:
The issue came to light on February 18, with IDFC First Bank disclosing details of this major scam in a stock exchange filing on February 21. The bank stated that after receiving communication from a Haryana Government department, they conducted a preliminary internal assessment. This fraud was discovered when a request was made by a department of the Haryana Government to close their account and transfer funds to another bank, during which a significant discrepancy in the amount was found.
The bank is in the process of appointing an independent agency to conduct a forensic audit and has lodged a police complaint alongside suspending four officials.
