The Haryana Government has taken immediate action by de-empanelling IDFC First Bank and AU Small Finance Bank from conducting government business following the exposure of an alleged fraud amounting to approximately Rs 590 crore. A circular issued by the state government has prohibited both banks from engaging in any government-related transactions in Haryana until further notice. All government departments, boards, corporations, and public sector undertakings have been instructed to cease using these banks for deposits, investments, or any financial transactions.
The Finance Department highlighted discrepancies in adhering to fixed deposit guidelines, noting instances where funds intended for flexible deposits or higher-interest fixed deposit schemes were reportedly held in savings accounts instead. This mismanagement resulted in diminished returns and financial losses for the state. Departments have been directed to strictly adhere to approved deposit terms, regularly monitor bank compliance, conduct monthly reconciliations, and promptly report any irregularities.
In response to the situation, departments are required to finalize all reconciliations by March 31, 2026, and submit a certified compliance report by April 4, 2026. The measures were prompted by IDFC First Bank’s revelation in a regulatory filing of a fraud amounting to around Rs 590 crore involving specific Haryana government-linked accounts operated through its Chandigarh branch. The bank attributed the discrepancies to unauthorized and fraudulent activities allegedly carried out by certain branch employees, potentially involving other individuals or entities.
IDFC First Bank clarified that the issue was confined to a specific set of Haryana government-linked accounts managed by the Chandigarh branch and did not impact other clients. The total sum under reconciliation in the identified accounts is estimated at approximately Rs 590 crore, with the final amount subject to further validation and potential recoveries. Four bank officials have been suspended pending investigations, and the bank has pledged to take stringent disciplinary, civil, and criminal actions against those accountable. Additionally, the bank has initiated recovery efforts by requesting beneficiary banks to lien-mark balances in suspicious accounts and has informed statutory auditors for a forensic audit by an external agency.
