In a decisive move against financial misconduct, the Haryana government has immediately de-empaneled IDFC First Bank and AU Small Finance Bank following the detection of alleged irregularities worth approximately Rs 590 crore. This action bars both banks from any government transactions in the state until further notice.
An official circular from the government directs all departments, boards, corporations, and public enterprises to halt all deposits, investments, or financial dealings with these banks. Existing balances must be swiftly transferred to other authorized banks, with accounts closed promptly.
The finance department highlighted serious lapses in adhering to fixed deposit guidelines. Funds meant for flexi deposits or high-interest FD schemes were allegedly parked in low-yield savings accounts, causing substantial losses to the state exchequer through reduced interest earnings.
To prevent future irregularities, departments have been ordered to strictly follow approved deposit terms, conduct regular compliance checks with banks, perform monthly reconciliations, and report any discrepancies immediately. All accounts must be reconciled by March 31, 2026, with certified compliance reports due by April 4, 2026.
The crackdown follows IDFC First Bank’s regulatory disclosure of a fraud involving Haryana government-linked accounts operated through its Chandigarh branch. Preliminary probes point to unauthorized activities by branch staff, possibly involving external parties.
The issue surfaced when a government department sought to close its account and transfer funds, revealing a mismatch between recorded and actual balances. Similar discrepancies emerged in other accounts since February 18.
IDFC First Bank clarified that the fraud is confined to specific Haryana government accounts at the Chandigarh branch, with no impact on other customers. The unreconciled amount stands at around Rs 590 crore, subject to final verification post-investigation and recovery.
Four bank officials have been suspended pending inquiry. The bank vows strict disciplinary, civil, and criminal action against culprits. Recall requests have been sent to beneficiary banks for lien marks on suspect balances, statutory auditors notified, and a forensic audit commissioned from an independent agency.