NEW DELHI, Feb 23: AU Small Finance Bank has denied any wrongdoing in the alleged fraudulent opening of accounts after Haryana de-empanelled it from undertaking any government business.
The Haryana government has de-empanelled AU Small Finance Bank, along with IDFC First Bank, from undertaking any government business over alleged fraudulent opening of accounts.
AU Small Finance Bank said the accounts in question were opened after completing all necessary KYC checks and authorisations.
“IDFC First Bank and AU Small Finance Bank are hereby de-empanelled for government business in Haryana with immediate effect till further orders,” a circular issued by the finance department of the Haryana government stated.
IDFC First Bank on Sunday disclosed a Rs 590-crore fraud committed by its employees and others in accounts held by the Haryana government with the private sector lender.
AU Small Finance Bank in a filing late on Sunday evening said the government account in question was opened with an initial credit of Rs 25 crore transferred from a large private sector bank and additional credits of Rs 47 crore were subsequently received through multiple transactions from another private sector bank (IDFC First Bank).
Of the total credits received in the government account, Rs 47 crore were transferred to the customer account through 14 transactions, it said.
As per bank’s preliminary findings, it said, all these 14 transactions were initiated by the Haryana government department concerned, and they were duly authorised, and executed in accordance with the instructions provided by the department, in the normal course of business.
The bank maintains a complete audit trail and all details, including account opening forms, KYC documentation, cheques and other transaction instructions, verification call details and supporting records that have been submitted to the government department concerned, it said.
The said account was closed on January 15, 2026, as per instructions from the department and the outstanding balance of Rs 25 crore, along with accrued interest was transferred back to the original large private sector bank.
“Based on available facts at this stage and preliminary review, there is no indication of any financial impact or any fraudulent activity towards the bank,” it said.
The filing further said the bank’s board has been informed and the bank continues its internal review in the matter to ensure a fair and transparent review, certain employees have been placed off duty.
As on February 17, 2026, the bank had total deposits of Rs 735 crore from the Haryana government, which has reduced to Rs 538 crore as on February 21, 2026 across accounts (0.4 per cent of overall deposits as on December 31, 2026), following this de-empanelment, it said.
The bank is committed to strong governance, transparency, and the safeguarding of public funds and it will continue to engage with Haryana for re-empanelment and communicate with all other stakeholders, it added. (PTI)
The post AU Small Finance Bank denies wrongdoing after Haryana bars lender from Govt business appeared first on Daily Excelsior.