Staff collusion behind Rs 590 cr fraud: IDFC First Bank MD
image for illustrative purpose
Mumbai: The Rs590-crore fraud involving Haryana government accounts at IDFC First Bank was the result of collusion between certain bank employees and external parties, the lender’s Managing Director and CEO V Vaidyanathan said on Monday. The incident, involving forged physical cheque transactions, is restricted to a single branch in Chandigarh and one client group, with no system failure or wider operational lapses, he asserted.
Addressing investors and analysts in a special call ahead of market opening, Vaidyanathan said the bank will take provisions in line with its policy of recognising stress upfront, but the impact on profitability is expected to be limited. Strong net interest margins, estimated at around 5.8 per cent for the current quarter, and lower credit costs should help cushion the effect. “On a standalone basis, we were expecting a very solid Q4 in terms of profitability,” he said.
The bank has pegged the discrepancy around Rs 590 crore, comprising Rs 490 crore identified following reconciliation and an additional Rs 100 crore that was “self-identified” through internal checks, the MD said, hinting that the amount of Rs 590 crore is unlikely to increase. Recoveries and “employee dishonesty insurance” cover of Rs 35 crore could reduce the impact on the bank, he said.
