De-empanelled by Haryana, AU Small Finance Bank opens probe, sends staff 'offduty'

AU Small finance Bank

AU Small Finance Bank has initiated an internal review and some employees have been "put off duty until investigations"  after the Haryana government de-empanelled its accounts, the Jaipur headquartered lender has said.

"The bank’s board has been informed and the bank continues its internal review on this matter. To ensure a fair and transparent review, certain employees have been placed offduty," the lender said in a release on February 22. The bank, however, maintained that there is no indication of any financial impact or any fraudulent activity.

IDFC First Bank faced similar action after the private lender late on February 21 said it identified a Rs 590 crore-crore involving some Haryana government-linked accounts at its branch in Chandigarh.

The incident came to light after the lender received a request from a particular Haryana government department for closure of its account and transfer of funds to another bank. "In the process, certain discrepancy were observed in the amount mentioned vis-a-vis the balance in the account," IDFC First Bank said.

Few other departments engaged with the bank for their respective accounts during which several "differences were observed" in the balance records of the bank and the state government. The lender has placed four suspected officials under suspension till the investigation is over, it said.

The de-empanelment will have a sizable impact on the AU Small Finance Bank's government’s deposits. As of February 17, the bank held approximately Rs 735 crore in deposits from the Haryana government. Following the de-empanelment, this amount decreased to approximately Rs 538 crore as of February 21.