IDFC First Bank fraud was isolated case involving collusion: KPMG

Kolkata: A forensic review on showed that the Rs 646-crore fraud on the bank’s Chandigarh branch was an isolated incident arising from collusion involving bank employees, state governments officials and some third parties.

The bank, based on the claims received, paid the net principal amount totalling Rs 645.59 crore and applicable interest to 11 government accounts and two school accounts, the forensic review report by KPMG confirmed. The private sector lender recognised the same in the fourth quarter accounts.

KPMG submitted the report Friday.

The findings reaffirm that the Incident involved fraudulent activities and this was an isolated incident involving one branch and such incidents have not been observed at other branches, said after its board took note of the report.

The bank said that it implemented additional preventive controls to strengthen oversight, particularly collusion risk at the branch level, following the fraudulent incident.

“These additional measures include implementation of oversight processes by a centralised team in addition to branch-level authorisation, enhanced customer communication processes, and other technology led system controls,” it added.

KPMG said its procedures were limited to understanding the incident, the financial impact and people responsible for the same. “Our procedures that included selective testing of data and understanding of process may not identify all errors/risks, including process risks and other illegal acts/regulatory non-compliance having a direct or indirect financial impact,” KPMG observed.