The Haryana state government’s finance department announced in an official circular on Sunday, Feb. 22 that all government bank accounts held in IDFC First Bank and AU Small Finance Bank across the state will be de-empaneled with immediate effect. The move comes after IDFC First Bank disclosed a Rs 590-crore fraud by its employees and others in accounts held by the Haryana government.
According to the state government’s notification, no state funds are allowed to be deposited, invested or transacted via the two private lenders. All departments shall transfer balances and close accounts from both banks, as per the circular. The state government addressed the circular to all state-run departments as well as public, private, and small finance banks operating in Haryana.
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Haryana state government’s order againts IDFC First Bank, AU SFB
Haryana’s finance department also found that certain banks are not adhering to the conditions under which fixed deposits are being made by departments/corporations. ”In several cases, it has been observed that despite clear instructions to place funds in flexible deposits or other fixed deposit instruments offering higher rates of interest, banks are retaining the funds in savings accounts, resulting in lower returns and consequent financial loss to the government,” said the state government.
It further added that many departments and corporations are not regularly reconciling their fixed deposit and bank accounts with the concerned banks, leading to non-detection of such irregularities in a timely manner. In view of the above, Haryana has directed all state departments, corporations, boards, and PSUs to adhere to the following:
I. Ensure that fixed deposits are placed strictly in accordance with the approved terms and conditions.
II. Regularly verify and confirm that banks are complying with the prescribed deposit instructions.
III. Undertake reconciliation of all fixed deposit and related bank accounts on a monthly basis.
IV. Immediately take up discrepancies with the concerned banks and report serious deviations to the Finance Department.
The state government also ordered all state-run authorities to reconcile their respective bank accounts strictly in accordance with the guidelines issued by the finance department and complete the process in all respects by March 31, 2026. ”A compliance report, duly certified by the competent authority, shall be submitted to the Finance Department by April 4, 2026,” it said.
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IDFC First Bank reports Rs 590-Crore Fraud
In a regulatory filing, IDFC First Bank said it has disclosed the matter to the banking regulator and also filed a police complaint. “Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals/entities/counterparties,” said IDFC First Bank.
At present, it estimated the fraud size at Rs 590 crore and added that a “reconciliation exercise” will determine the final amount based on receipt of further information, validation of claims, and recoveries of any nature. Four IDFC First bank officials have been suspended pending investigation, the bank said, assuring strict disciplinary or criminal action against the employees and other external individuals responsible.
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