IDFC First and AU SFB Barred from Haryana Govt Business in Wake of ₹590 Crore Fraud

The Haryana government has taken decisive action against IDFC First Bank and AU Small Finance Bank (AU SFB) following a major fraud involving state funds and irregularities in deposit management, as per news reports. 

Immediate De-Empanelment of Banks 

On February 22, 2026, Haryana's finance department issued a circular ordering the immediate de-empanelment of all government bank accounts held in IDFC First Bank and AU Small Finance Bank.  

This directive prohibits any state funds from being deposited, invested, or transacted through these lenders. All departments must transfer balances and close accounts promptly. 

Fraud Detection and Bank Irregularities 

The action follows IDFC First Bank's disclosure of a ₹590 crore fraud involving unauthorised activities by employees in Haryana government accounts at a Chandigarh branch.  

The bank filed a police complaint and suspended four officials pending investigation, pledging disciplinary/criminal action against responsible parties. 

Additionally, the state government identified systemic irregularities where banks retained funds in low-interest savings accounts instead of higher-yielding flexible deposits, causing financial losses. Many departments failed to reconcile accounts monthly, delaying fraud detection. 

New Compliance Directives 

Haryana mandated all state entities to: 

1. Place fixed deposits strictly per approved terms.
2. Verify banks' compliance with deposit instructions.
3. Reconcile fixeddepositsand bank accounts monthly.
4. Report discrepanciesimmediatelyand escalate serious deviations to the finance department. 

Read More: Why Axis Bank, CreditAccess Grameen, IDFC First Bank and AU Small Finance on Investors Radar?! 

Account Reconciliation Deadline 

All state authorities must reconcile bank accounts per finance department guidelines by March 31, 2026. Certified compliance reports are due by April 4, 2026. 

Conclusion 

Haryana's de-empanelment of IDFC First Bank and AU SFB underscores zero tolerance for financial misconduct and operational lapses. The ₹590 crore fraud and deposit mismanagement triggered immediate corrective action, including mandatory account closures and stringent new compliance protocols to safeguard public funds. 

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