Haryana Government De-Empanels IDFC First Bank and AU Small Finance Bank Amid Fraud Concerns
The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank for government transactions following a fraud disclosure. Immediate actions are mandated to transfer balances and close accounts with these banks.
Business
The Haryana government has removed IDFC First Bank and AU Small Finance Bank from handling government business. This decision is effective immediately and will remain until further notice, as stated in an official circular. Consequently, no government funds will be managed or transacted through these banks.
IDFC First Bank recently reported a fraud involving Rs 590 crore, committed by its employees and others in accounts associated with the Haryana government. The bank has informed the banking regulator and lodged a police complaint regarding this issue. This disclosure was made in a regulatory filing on Sunday.
Government Funds Management
The circular mandates that all departments and organisations must swiftly transfer balances and close accounts with these banks. The Finance Department’s notification highlights that some banks are not following the conditions for fixed deposits set by Departments and Corporations. This has led to funds being kept in savings accounts instead of higher interest options, causing financial losses.
Many Departments and Corporations have failed to regularly reconcile their fixed deposit and bank accounts with the banks involved. This oversight has resulted in undetected irregularities. Therefore, all Departments, Corporations, Boards, and PSUs are instructed to ensure fixed deposits comply with approved terms.
Compliance and Reconciliation
Departments must verify that banks adhere to deposit instructions and reconcile all accounts monthly. Any discrepancies should be addressed with the concerned banks promptly, with serious issues reported to the Finance Department. The circular stresses that reconciliation must follow Finance Department guidelines.
All relevant entities are required to complete account reconciliation by March 31, 2026. A compliance report, certified by the competent authority, must be submitted to the Finance Department by April 4. This directive aims to ensure financial integrity and accountability across all government-related financial transactions.
With inputs from PTI