IDFC First Bank Scam: Fake Firms Used to Divert Rs 590 Crore Govt Funds, Say Police

Police investigating the ₹590-crore fraud linked to IDFC First Bank have revealed that the accused created multiple fake companies to siphon off government funds through fraudulent transactions.

According to investigators, the accused used fabricated debit memos and unauthorised fund transfers to move money from accounts belonging to several government departments into accounts controlled by the scam network.

The case, which surfaced in Chandigarh, has already led to the arrest of 11 individuals, including six bank employees, one government official and four other persons allegedly linked to the financial fraud.

Fake Companies and Forged Banking Documents

Officials said the accused set up shell companies and linked bank accounts to facilitate the diversion of funds.

The investigation has revealed that 12 bank accounts connected to eight government departments were involved in the fraudulent activity. Of these, 10 accounts were maintained at a branch of IDFC First Bank in Chandigarh, while two were held at AU Small Finance Bank.

Police said the accused prepared fake debit memos and used forged bank documents to move funds without proper authorisation.

Investigators also found evidence suggesting that manipulated bank statements were used to make the transactions appear legitimate.

Arrests and Custody Status

So far, police have arrested 11 people in connection with the scam. Among them are six employees of IDFC First Bank, one government official and four other individuals suspected of assisting in the operation.

Authorities confirmed that 10 of the accused are currently in judicial custody, while one person remains in police remand as the investigation continues.

Officials believe more arrests may follow as financial records and digital evidence are examined.

Raids and Seizure of Luxury Assets

As part of the investigation, law enforcement agencies carried out raids at 16 locations linked to the accused.

During these searches, officials recovered documents related to property purchases suspected to have been funded using proceeds from the fraud.

Investigators also seized more than 25 electronic devices, including mobile phones and laptops, which have been sent for forensic analysis.

In addition, authorities confiscated six luxury vehicles believed to have been purchased using illicit funds. The seized vehicles include three Toyota Fortuners, two Innovas and one Mercedes.

Properties Linked to Fraud Under Investigation

Police have identified 10 properties that are suspected to have been acquired through diverted funds.

Officials are currently analysing financial transactions from the past year to track the complete flow of money and identify additional assets linked to the scam.

Legal Action and Charges

An FIR in the case was registered on February 23, 2026, against unknown officials associated with IDFC First Bank and AU Small Finance Bank.

The case has been filed under provisions of the Prevention of Corruption Act, 1988 (as amended in 2018) and sections of the Bharatiya Nyaya Sanhita, 2023.

Authorities say the investigation is ongoing and more details about the financial network behind the scam may emerge as forensic and financial analyses continue.