IDFC First Bank has disclosed a fraud of nearly ₹590 crore at its Chandigarh branch, involving accounts linked to the Haryana government. The bank has reported the matter to regulators and launched an internal investigation to determine how the irregularities occurred.
The fraud was detected in government-related accounts, raising alarm over the safety of public funds. IDFC First Bank confirmed that it is cooperating with authorities, including the Reserve Bank of India, and has begun corrective measures to strengthen its internal controls.
In a swift response, the Haryana government has de-empanelled both IDFC First Bank and AU Small Finance Bank from handling state transactions. This means the two institutions will no longer be allowed to manage government accounts, schemes, or funds in the state.
Officials said the move was precautionary, aimed at safeguarding public money and ensuring transparency in financial dealings.
The incident has sparked wider debate about the monitoring of government accounts and the role of banks in preventing fraud. Financial experts point out that while frauds of this scale are uncommon, they highlight vulnerabilities in oversight and the need for stronger auditing practices.
For IDFC First Bank, the disclosure comes at a challenging time, as the institution has been expanding its footprint in retail and government banking services. The bank has assured stakeholders that it is committed to restoring trust and preventing similar incidents in the future.
The Haryana government’s decision to remove AU Small Finance Bank alongside IDFC First Bank suggests a broader review of empanelled institutions. Analysts believe this signals a tougher stance on accountability, with the state determined to enforce stricter standards across the banking sector.
As investigations continue, attention will focus on identifying how the fraud was carried out, who was responsible, and what measures can be introduced to strengthen safeguards around government-linked accounts. The case is expected to influence future policies on how states engage with banks for managing public funds.
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