New Delhi, Feb 22 (NationPress) On Sunday, the Haryana Government took decisive action by de-empaneling IDFC First Bank and AU Small Finance Bank from conducting government business immediately following the revelation of an alleged fraud estimated at Rs 590 crore.

In an official notification, the state government stated that both banks are prohibited from engaging in any government-related transactions in Haryana until further notice.

All departments, boards, corporations, and public sector enterprises have been instructed to cease any deposits, investments, or financial dealings with these banks.

Additionally, authorities are required to promptly transfer existing funds and close accounts held with the two banks.

The Finance Department highlighted failures in adhering to fixed deposit protocols. It observed that in some instances, funds intended for flexible deposits or higher-interest fixed deposit schemes were allegedly kept in savings accounts, resulting in diminished returns and financial losses for the state.

Departments have been directed to rigorously follow the established deposit terms, routinely verify bank compliance, conduct monthly reconciliations, and report any inconsistencies.

All reconciliations must be finalized by March 31, 2026, with a certified compliance report due by April 4, 2026.

This action follows IDFC First Bank's announcement in a regulatory filing, revealing the detection of a fraud amounting to approximately Rs 590 crore linked to certain Haryana government-associated accounts managed through its Chandigarh branch.

The bank indicated that there were prima facie unauthorized and fraudulent actions executed by some employees at the branch, potentially involving other individuals or entities.

The issue was identified when a Haryana government department requested the closure and transfer of its account balance to another bank.

During this process, discrepancies arose between the reported amount and the actual account balance.

Similar inconsistencies were later discovered in other government-associated accounts from February 18 onwards.

IDFC First Bank affirmed that its initial internal review indicates that this issue is confined to a specific set of Haryana government-linked accounts managed by the Chandigarh branch and does not affect other clients.

The total sum under reconciliation across the identified accounts is projected to be around Rs 590 crore, with the final figure to be confirmed following further validation and potential recoveries.

Four bank officials have been suspended pending an investigation, and the bank has pledged to undertake strict disciplinary, civil, and criminal actions against those found culpable.

Additionally, it has sent recall requests to specific beneficiary banks to lien-mark balances in suspected accounts as part of recovery efforts. The statutory auditors have been notified, and an independent external agency will conduct a forensic audit.