New Delhi: The Haryana Government on Sunday de-empanelled IDFC First Bank and AU Small Finance Bank from handling government business with immediate effect after an alleged fraud of around Rs 590 crore came to light.
In an official circular, the state government said both banks have been barred from carrying out any government-related transactions in Haryana until further orders.
It directed all departments, boards, corporations and public sector undertakings to stop using these banks for deposits, investments or any other financial dealings.
Authorities have also been asked to immediately transfer existing balances and close accounts maintained with the two lenders.
The Finance Department pointed out lapses in following fixed deposit instructions. It noted that in some cases, funds that were supposed to be placed in flexible deposits or higher-interest fixed deposit schemes were allegedly kept in savings accounts, leading to lower returns and financial loss to the state.
Departments have been instructed to strictly follow approved deposit terms, regularly verify compliance by banks, conduct monthly reconciliations and report any discrepancies.
All reconciliations must be completed by March 31, 2026, and a certified compliance report has to be submitted by April 4, 2026.
The action comes after IDFC First Bank disclosed in a regulatory filing that it had detected a fraud of about Rs 590 crore involving certain Haryana government-linked accounts operated through its Chandigarh branch.
The bank said there were prima facie unauthorised and fraudulent activities carried out by some employees at the branch, possibly involving other individuals or entities.
According to the bank, the issue surfaced when a Haryana government department requested closure and transfer of its account balance to another bank.
During the process, discrepancies were found between the amount mentioned and the actual balance in the account.
Similar discrepancies were later identified in other government-linked accounts from February 18 onwards.
IDFC First Bank clarified that its preliminary internal review suggests the matter is limited to a specific group of Haryana government-linked accounts handled by the Chandigarh branch and does not affect other customers.
The total amount under reconciliation across the identified accounts is estimated at around Rs 590 crore, and the final figure will be determined after further validation and possible recoveries.
Four bank officials have been suspended pending investigation. The bank said it will take strict disciplinary, civil and criminal action against those found responsible.
It has also issued recall requests to certain beneficiary banks to lien-mark balances in suspicious accounts as part of recovery efforts. The statutory auditors have been informed and an independent external agency will carry out a forensic audit.
(IANS)
