First Bank(US:FRBA) MINT·2026-02-23 02:15Core Viewpoint - AU Small Finance Bank and IDFC First Bank have been de-empanelled from handling Haryana government business due to alleged fraud, leading to a significant reduction in government deposits with these banks [1][10]. Group 1: De-empanelment Details - The Haryana government issued a notice on 18 February stating that no government funds shall be parked, deposited, invested, or transacted through AU Small Finance Bank and IDFC First Bank [10]. - The de-empanelment was prompted by a fraud investigation involving IDFC First Bank, where four employees are suspected of being involved in a ₹590 crore fraud targeting Haryana government-linked accounts [2][10]. Group 2: Internal Review and Findings - AU Small Finance Bank has initiated an internal review, confirming that the government and customer accounts involved were opened following all applicable KYC checks and internal policies [5][6]. - The internal review found no indication of financial impact or fraudulent activity towards AU Small Finance Bank, with all transactions in the government account being duly authorized and executed [6][7]. Group 3: Financial Impact - As of 17 February, AU Small Finance Bank had total deposits of approximately ₹735 crore from the Haryana government, which decreased to around ₹538 crore by 21 February, representing about 0.4% of the bank's overall deposits as of 31 December [8][10]. - The government account in question was initially credited with ₹25 crore and had about ₹47 crore transferred to a customer account through 14 authorized transactions [7][8]. Group 4: Compliance and Future Actions - AU Small Finance Bank is engaging with the Haryana government to understand the reasons for de-empanelment and is committed to cooperating with authorities [8][10]. - The Haryana government has directed all departments to ensure compliance with fixed deposit terms and to report discrepancies, emphasizing the need for regular audits and reconciliations to maintain financial integrity [10].