The disclosure of a Rs 590 crore fraud at IDFC First Bank has triggered sharp mark-to-market losses for two of its largest shareholders: the Government of India and Life Insurance Corporation (LIC). The stock crashed nearly 20% to a low of Rs 66.85 on Monday after the private lender informed exchanges about unauthorised transactions at its Chandigarh branch involving accounts linked to Haryana government entities.

Following the decline, LIC, which holds 20,23,69,591 shares in the bank, saw the value of its investment fall by about Rs 338 crore in a single session. The Government of India, which owns 6,665,70,000 shares, suffered a larger notional erosion of around Rs 1,114 crore.

Together, the two public institutional shareholders lost roughly Rs 1,452 crore in market value as investors reacted to the disclosure. The broader sell-off wiped out nearly Rs 14,000 crore in market capitalisation, marking the stock’s steepest fall since March 2020.

The fraud, estimated at Rs 590 crore, exceeds the bank’s most recent quarterly net profit of Rs 503 crore, amplifying concerns over governance and internal controls. Brokerages said the hit could affect earnings for the year, though the bank’s capital position remains largely intact.

The lender said the irregularity was confined to a single branch and linked to specific accounts. Four officials have been suspended, and a forensic audit has been initiated. Management maintained there was no systemic failure and that adequate controls were in place.

However, beyond the immediate financial impact, the episode has raised questions about oversight in handling public funds. The Haryana government has de-empanelled the bank and directed departments to close their accounts, adding to reputational pressure.

While the Rs 590 crore fraud may be manageable relative to the bank’s balance sheet, the market reaction underscores how governance lapses can swiftly translate into shareholder wealth destruction.