Haryana Chief Minister Nayab Singh Saini informed the State Assembly that the government successfully recovered ₹578 crore from IDFC First Bank within 24 hours of the matter escalating.
The recovery consists of ₹556 crore in principal and ₹22 crore in accrued interest. The funds were returned after a massive fraud—initially estimated at ₹590 crore—was detected in government-linked accounts at the bank’s Chandigarh branch.
Timeline of the Fraud & Recovery
The discrepancy was uncovered during a routine administrative attempt by a state department to move its funds.
- Detection (Feb 18): A Haryana government department requested to close its account and transfer the balance to a nationalized bank. The bank’s records showed a significantly lower balance than what the department’s books indicated.
- Internal Audit (Feb 18–21): Subsequent checks revealed similar “mismatches” in other state-linked accounts. IDFC First Bank identified a shortfall of roughly ₹590 crore.
- De-empanelment (Feb 18): The Haryana Finance Department immediately de-empanelled IDFC First Bank and AU Small Finance Bank, barring all state departments and PSUs from doing further business with them.
- Full Recovery (Feb 24): Within a day of the fraud becoming public knowledge, the bank credited the entire missing amount (plus interest) back to the state’s accounts.
The Mechanics of the “Employee Scam”
According to statements from Chief Minister Saini and IDFC First Bank CEO V. Vaidyanathan, the fraud was a localized criminal act rather than a systemic failure.
- Internal Collusion: Four to five middle-and-lower-rung employees at the Chandigarh branch allegedly connived with external parties.
- Forged Transactions: The scam involved “unauthorized and fraudulent activities,” including the use of forged physical cheques to siphon off government funds.
- Isolated Incident: The bank has assured the RBI and the public that the issue is strictly limited to this specific group of Haryana government accounts and does not affect regular retail or corporate customers.
Current Actions & Consequences
While the money has been returned, the legal and administrative fallout is ongoing:
- Suspensions: IDFC First Bank has suspended four employees pending a full investigation.
- Forensic Audit: The bank has appointed KPMG to conduct an independent forensic audit, expected to conclude in 4–5 weeks.
- Criminal Probe: The case has been handed over to the State Anti-Corruption Bureau (ACB) and the Vigilance Department. CM Saini promised that no one—including government officials or bank staff—would be spared if found guilty.
- Market Impact: The news caused a temporary shock to IDFC First Bank’s stock, which plunged 20% on Monday before stabilizing following the recovery announcement and a “no systemic risk” assurance from RBI Governor Sanjay Malhotra.
New Safeguards for State Funds
In response to this lapse, the Haryana government has mandated that all state entities must:
- Reconcile their bank accounts monthly (moving away from quarterly or annual checks).
- Submit certified compliance reports by April 4, 2026.
- Strictly ensure that funds are placed in high-interest flexible deposits rather than basic savings accounts, which was another irregularity spotted during this probe.
