Seventy-two hours
Published 3 October 2026
The public story begins here, with a circular that gave no reason.
Wednesday, 18 February
On 18 February the Haryana Finance Department issued instructions to administrative secretaries, heads of departments, deputy commissioners and managing directors. The order said IDFC First Bank and AU Small Finance Bank were "hereby de-empanelled for government business in Haryana with immediate effect till further orders". No government funds, the instructions said, should henceforth be parked, deposited, invested or transacted through the two banks, and departments were told to transfer balances and close accounts. The circular also flagged concerns about fund handling, including instances where money meant for fixed deposits was retained in lower-yield savings accounts, and lapses in reconciliation, and mandated monthly account reconciliation. Hindustan Times noted that no reason was ascribed for the de-empanelment.
When departments tried to close their accounts and move their money, ET reported, one noticed the gap between what the bank's system showed and what the department had on record, and then several Haryana government entities engaged with the bank regarding their accounts and found similar mismatches. In the vigilance bureau's later account, the bank wanted to complain to police but the case belonged in Haryana.
Friday, 20 and Saturday, 21 February
The bank's own governance moved quickly. A meeting of the Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds convened on Friday, 20 February, followed by meetings of the audit committee and the board on Saturday, 21 February, per the bank's disclosure as quoted by Hindustan Times. The bank said it was in the process of appointing an independent external agency for a forensic audit, and that statutory auditors had been informed.
Sunday, 22 February: the filing
The disclosure came on Sunday, 22 February, in a regulatory filing. ET quotes it: "Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals/entities/counterparties." The filing said a preliminary internal review showed the issue was confined to government-linked accounts handled at the Chandigarh branch and did not extend to other customers of the branch. The aggregate amount under reconciliation across the identified accounts, it said, was approximately Rs 590 crore. Hindustan Times dated the disclosure to Saturday in one passage, and ET, ETV Bharat, The Hindu BusinessLine and the Business Standard to Sunday. The sources differ on the day. This file uses Sunday.
Four employees suspected of involvement, the bank said, had been suspended pending investigation. A complaint had been filed with police, and the bank said it would pursue strict disciplinary, civil and criminal action against the employees and outside individuals responsible. It said the impact on its books would depend on further information, recoveries of any nature including through liens on fraudulent beneficiary accounts maintained with other banks, liabilities of other entities, and the legal recovery process.
Where the number came from
The Rs 590 crore figure had two parts, and the bank explained both the next morning. The bank said that the discrepancy found initially was Rs 490 crore, and that reconciliation found a further Rs 100 crore, so the total impact came to Rs 590 crore. The managing director described the extra Rs 100 crore as "self-identified" through the bank's own internal checks, per ETV Bharat. "We have put out this number as we could best assess at this point of time," he said, adding that the bank did not expect it to move materially.
It did move, as the next chapters show. The bank's own later disclosures would put the principal at about Rs 646 crore. Nothing in the sources reviewed says the Rs 590 crore was wrong when it was stated; it was the bank's estimate on that date, with the caveat attached. The sources also give no line-by-line bridge from Rs 590 crore to Rs 646 crore. What they show is that the ED's Rs 645.59 crore figure includes Chandigarh civic bodies, CREST and two private schools, which the 22 February description did not name.
What the bank did on day one
By Monday morning the bank had appointed KPMG for the forensic audit. The managing director said on the analyst call that the appointment was made on Sunday and that such reviews typically conclude in four to five weeks. In fact the KPMG review's findings were disclosed on 5 June, a Friday, about fifteen weeks later. The bank said it would take liens on beneficiary accounts, pay the unreconciled amount to Haryana as soon as possible, and tighten its confirmation procedures for high-value branch transactions with verification through a digital channel. It said it would use AI for first-pass cheque-signature verification, with a human double-check.
It had taken the bank four days from the circular to the filing, and about six weeks from the department's first letter of 13 January. When the market opened on Monday, 23 February, it had just the filing and the call.
Get the next file
One email when a new file is published. No paid service needed.