Private lender IDFC First Bank has disclosed an alleged fraud of Rs. 590 crore at its Chandigarh branch involving accounts of the Haryana Government, prompting swift action from the state’s Finance Department, including the immediate delisting of two private banks from government business.
In a communication to the National Stock Exchange of India and the Bombay Stock Exchange, the bank said it had identified an aggregate amount of Rs. 590 crore “under reconciliation” across certain accounts at the branch. The discrepancy came to light after the state’s Development and Panchayats Department sought closure of its accounts and transfer of funds to another bank, following which a mismatch was detected between the account balance and departmental records on February 18.
The bank stated that four suspected officials have been placed under suspension pending investigation. It has also appointed an independent external agency to conduct a forensic audit and filed a complaint with the police. The lender indicated that the alleged fraud was committed by its employees and “potentially” involved other parties.
Acting on the disclosure, the Haryana Finance Department has delisted IDFC First Bank and AU Small Finance Bank from handling government business with immediate effect. All departments have been directed to close their accounts in these banks and transfer funds to other approved institutions.
Official sources said the Crime Branch has been asked to examine the matter, and the government is considering registration of an FIR.
An internal communication from the Development and Panchayats Department reportedly flagged irregularities in two accounts opened under the MMGAY-2.0 (Mukhya Mantri Gramin Awas Yojana) scheme in the two private banks. Detailed scrutiny of account statements revealed unauthorised credit and debit transactions despite no corresponding instructions from the department.
The letter also noted that similar unauthorised transactions were observed in accounts of two other departments.
The state government has constituted a committee to conduct a detailed inquiry into the matter. Meanwhile, the Finance Department has instructed all Administrative Secretaries to open accounts only in nationalised banks. Opening accounts in private or corporate banks will now require prior approval.
The department warned that any accounts opened in violation of prescribed procedures will be treated as “irregular and liable to immediate closure.” Non-compliance may attract administrative and financial action under applicable government rules.
Additionally, all boards, corporations and departments have been directed to reconcile their bank accounts in line with prescribed norms by March 31.
