Haryana delists two private banks as staff at Chandigarh branch swindle Rs 590 crore

Private lender IDFC First Bank has disclosed a Rs 590-crore fraud allegedly committed by its employees, “potentially” involving others, in accounts held by the Haryana Government at its Chandigarh branch. This comes following an internal assessment by the bank after it received a communication in this regard from the state government.

Acting on the disclosure, the state Finance Department has issued detailed directions delisting two banks — IDFC First and AU Small Finance Bank — for government business with immediate effect. Further, all state departments have been asked to close down their accounts in these banks and transfer funds to other banks.

While official sources say the Crime Branch has been asked to look into the matter, the government is considering an FIR in this regard.

Shift all a/cs to PSU banks: Finance Dept

• De-empanel IDFC First Bank & AU Small Finance Bank
•  Close all accounts, transfer funds from these banks
• Depts to open accounts
• only in nationalised banks
• Nod must if a/cs to be opened in private/corporate banks
• Funds to be placed in flexible deposits offering higher rates of interest
• Boards/corporations/depts to reconcile all accounts by March 31

The matter came to light after the bank, in a communique to the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE), yesterday said it had received a request from the state Development and Panchayats Department for closure of its accounts and transfer of funds to another bank. Subsequently, a mismatch was found on February 18 in the account balance and the balances mentioned by the department holding these accounts.

“The aggregate amount under reconciliation across the identified accounts at the branch is Rs 590 crore,” the bank said, adding that four suspected officials had been placed under suspension pending investigation, an independent external agency would conduct an audit while a complaint with the police had already been filed.

Sources in the government said an internal letter from the department pointed to irregularities in two accounts opened in IDFC First Bank and AU Small Finance Bank under the MMGAY-2.0 (Mukhya Mantri Gramin Awas Yojana) scheme. On examination of detailed statements, unauthorised transactions were found in both accounts in credit and debit entries despite no such instructions.

The letter mentioned that similar unauthorised transactions took place in the accounts of two other departments. The state government has constituted a committee to conduct an inquiry.

The Finance Department has instructed Administrative Secretaries to open accounts only in nationalised banks and seek prior permission of the department if accounts are to be opened in a corporate or private bank.

Any accounts opened without adhering to the laid down procedure will be considered “irregular and liable to immediate closure”. Non-compliance of the orders will invite administrative and financial action under government rules, the department has said. The Finance Department has also asked all boards, corporations and departments to reconcile their bank accounts in accordance with the specified norms by March 31.