On February 18, the Haryana government with immediate effect removed IDFC First Bank and AU SFB from government operations in the state until further notice. It said that henceforth, no government funds should be parked, deposited, invested or traded through these banks and advised all concerned state government departments to take immediate action for transfer of balances and closure of accounts in the above-mentioned banks.
The state Finance Ministry said it was noticed that despite clear instructions to place money in flexible deposits or other fixed deposit instruments offering higher interest rates, some banks kept the money in savings accounts, resulting in lower returns.
AU SFB, meanwhile, says that the lender first received a communication dated February 16, 2026, from a particular ministry of the Government of Haryana, seeking account opening and transaction details relating to a specific account opened by the said ministry. The bank has provided all requested account-related information.
On February 18, 2026, the lender also received a separate notice from the department requesting information regarding suspected unauthorized transactions between the Government Account and another customer account held at the bank.
Based on all these events and communications, the lender has started an internal investigation. According to the bank’s data:
i) This government account was opened with an initial credit of ₹25 crore transferred from a major private sector bank.
ii) Subsequently, additional credits of ₹47 crore were received through multiple transactions from IDFC First Bank, which has recently ensured public disclosure of unauthorized and suspected fraudulent activities.
iii) Of the total credit received in the government account, ₹47 crore has been transferred to the customer account through 14 transactions
iv) All these 14 transactions were initiated by the concerned Ministry, duly authorized, and executed in accordance with the instructions of the Ministry, in the ordinary course of business.
“The Bank maintains a complete audit trail and all details including account opening forms, KYC documentation, checks and other transaction instructions, details of verification calls and supporting data submitted to the concerned government department.”, AU SFB said, adding that there is no indication of any financial impact or any fraudulent activity against the bank at this stage.
“As on February 17, 2026, the bank had total deposits of Rs 735 crore from the Haryana government, which has been reduced to Rs 538 crore as on February 21, 2026 across 200 accounts (0.4 percent of the bank’s total deposits as on December 31, 2026), after this de-empanelment,” the lender said. END
Published on February 23, 2026
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