Two banks have been de-empanelled and four officials suspended after irregularities in Haryana government-linked accounts surfaced, triggering an FIR, an Assembly confrontation, and RBI reassurance on stability.
The Chandigarh branch of IDFC First Bank is at the centre of the alleged Rs 590-crore fraud involving Haryana government accounts. | IANS
The Haryana Vigilance and Anti-Corruption Bureau has filed a case in connection with the alleged Rs 590-crore fraud linked to Haryana government accounts maintained at the Chandigarh branch of IDFC First Bank and AU Small Finance Bank. The development comes after the state government removed both banks from its empanelled list and ordered a detailed, high-level investigation into the transactions.
What began as a discrepancy in financial records has now escalated into a full-blown political controversy, with heated exchanges in the Assembly, suspension of bank officials and scrutiny over how funds belonging to 18 government departments were allegedly handled without red flags being raised. The Reserve Bank of India (RBI), however, has clarified that there is no broader threat to the banking system.
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As per IANS, the FIR names bank officials, public servants, and others under Section 13(2) of the Prevention of Corruption Act, along with Sections 316(5), 318(4), 336(3), 338, 340(2) and 61(2) of the Bharatiya Nyaya Sanhita.
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Addressing the Assembly during the Budget Session, Chief Minister Nayab Singh Saini said the issue surfaced due to vigilance within state departments. He asserted that public funds remain secure. “The money is completely safe. Every single rupee will be recovered,” he said.
Saini informed the House that the government had already de-empanelled the bank on February 18 and instructed that the entire amount, with interest, be moved to a nationalised bank. He added that transaction statements shared by the bank did not tally with departmental records, prompting the decision to constitute a high-level committee to examine the matter thoroughly.
In a stock exchange filing last week, IDFC First Bank acknowledged that it had detected fraudulent activity involving roughly Rs 590 crore in certain Haryana government-linked accounts at its Chandigarh branch.
The bank maintained that, based on its preliminary internal review, the issue is restricted to a specific cluster of government accounts operated through that branch and does not affect other customers.
Four officials have been suspended pending investigation. The bank said it would initiate disciplinary, civil and criminal proceedings against those found responsible, including external parties where applicable. It has also informed regulators and lodged a police complaint.
“Based on the preliminary internal review conducted, the matter is confined to a specific group of government-linked accounts within Haryana Government operated through the said branch in Chandigarh and does not extend to other customers of the Chandigarh Branch,” the bank said.
According to the filing, the final financial impact will depend on reconciliation of claims, recovery measures, including marking lien on beneficiary accounts held with other banks, and the outcome of legal proceedings.
The Haryana Finance Department (Institutional Finance & Credit Control) has withdrawn empanelment of IDFC First Bank and AU Small Finance Bank with immediate effect.
Government departments, corporations, boards, and public sector undertakings have been instructed to transfer balances to authorised banks and close existing accounts. Until further notice, no government transactions will be routed through the two banks.
The Chief Minister noted that the practice of departments placing funds with banks was not new and had continued across previous administrations. A substantial portion of the state’s deposits with IDFC First Bank, he said, had been placed in fixed deposits.
Leader of Opposition Bhupinder Singh Hooda termed the alleged scam “serious” and accused the government of delaying decisive action.
“This massive scam was carried out by manipulating the accounts of 18 government departments,” Hooda said in the Assembly, alleging that stricter measures should have preceded the controversy.
Opposition leaders questioned whether audit systems and monitoring checks had failed, asking how discrepancies between bank statements and departmental records remained undetected.
Congress MLA Ashok Arora also raised concerns over the placement of government funds in private banks, citing RBI guidelines and alleging misuse.
In a post on ‘X’, Congress leader Rao Narendra Singh described the matter as an “assault on public trust” and asked: “How could such a massive amount of money be siphoned off without gross negligence or collusion at the highest levels? Were the internal audit, monitoring mechanisms, and government financial controls reduced to mere paper formalities?”
Former Deputy Chief Minister and JJP leader Dushyant Chautala said he would approach the Governor to press for a judicial probe.
While the RBI has stated that the episode does not pose a systemic risk to the banking sector, opposition leaders argue that it has exposed vulnerabilities in the oversight of public funds parked with private banks.
RBI Governor Sanjay Malhotra said the central bank does not comment on specific institutions but is closely monitoring developments.
“We are watching the developments, and there is no systemic kind of issue over here,” he said after a meeting of the RBI’s central board in New Delhi.
He added that the banking system remains well-capitalised, with a capital adequacy ratio of about 17 per cent.
Following the disclosure, IDFC First Bank shares fell sharply, touching the 20 per cent lower circuit at Rs 66.85 in early trade. The stock later pared some losses and was trading at Rs 70.40, down 15.70 per cent during the session.
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