REGULATORY · COMPETITIVE · INDIA
Haryana halts government banking with IDFC First, AU SFB
Economic Times
22 Feb · 11:44 PM
Change
Haryana’s Finance Department de-empanelled IDFC First Bank and AU Small Finance Bank for all government business with immediate effect until further orders.
Why it matters
The circular bars any further government fund flows through IDFC First Bank and AU Small Finance Bank, covering deposits, investments, and transactions, and applies immediately with no stated end date. Operationally, this forces a rapid rerouting of payment and treasury workflows for departments, corporations, and other covered entities that used these banks. The order also triggers account closures and balance transfers, creating near-term settlement, reconciliation, and counterparty coordination pressure. The action follows IDFC First Bank’s disclosure of a Rs 590-crore fraud involving accounts held by the Haryana government and a police complaint and regulator notification.
Implications
- • Immediate loss of Haryana government deposit/transaction flows for both banks
- • Forced migration of government accounts, balances, and payment rails
- • Potential disruption to vendor payments and treasury operations during transfers
- • Heightened scrutiny of FD condition compliance across empanelled banks
Who is affected
- • Haryana state departments and government-linked corporations/organisations
- • IDFC First Bank (public-sector business and treasury operations)
- • AU Small Finance Bank (public-sector business and treasury operations)
- • Vendors and counterparties paid via Haryana government banking channels
Source
Read full article on Economic Times →
Topics
Law & Public Safety Regulatory Actions Compliance Finance & Banking Financial Services