New Delhi, February 22: The Haryana government has de-empaneled IDFC First Bank and AU Small Finance Bank from government operations with immediate effect, following allegations of financial irregularities amounting to approximately ₹590 crores.
An official circular issued by the government stated that until further notice, both banks will not be allowed to engage in any government transactions in Haryana. All departments, boards, corporations, and public enterprises have been instructed to immediately cease any deposits, investments, or financial transactions with these banks.
Additionally, relevant departments have been directed to transfer any remaining balances in these banks to other authorized banks and close the accounts.
The finance department has highlighted serious lapses in compliance related to fixed deposits (FDs). According to the department, in some instances, funds that should have been placed in flexi deposits or higher interest FD schemes were allegedly kept in savings accounts, resulting in lower interest earnings and financial losses for the state.
The government has mandated all departments to strictly adhere to approved deposit conditions, conduct regular compliance checks by banks, perform monthly reconciliations, and promptly report any discrepancies.
All account reconciliations must be completed by March 31, 2026, with certified compliance reports submitted by April 4, 2026.
This action comes after IDFC First Bank disclosed in a regulatory filing that fraudulent activities involving approximately ₹590 crores had been detected in accounts linked to the Haryana government, managed through its Chandigarh branch.
The bank indicated that preliminary investigations revealed signs of unauthorized and fraudulent activities by some branch employees, with possible involvement from other individuals or entities.
The issue was uncovered when a department of the Haryana government requested to close its account and transfer the remaining balance to another bank. During this process, discrepancies were found between the recorded amount in the account and the actual balance. Similar inconsistencies were reported in other government accounts starting February 18.
The bank clarified that, according to its initial internal investigation, this issue is limited to certain accounts linked to the Haryana government managed by the Chandigarh branch and has not affected other customers.
The total amount identified in the accounts is estimated to be around ₹590 crores. The final amount will be determined after further investigation and potential recovery efforts.
Pending the investigation, four bank officials have been suspended. The bank has stated that strict disciplinary, civil, and criminal actions will be taken against those found guilty.
Moreover, requests have been sent to the relevant beneficiary banks to place lien marks on the remaining balances in the suspicious accounts. Statutory auditors have been notified, and a forensic audit will be conducted by an independent external agency.
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