Rs 590-crore fraud fallout: Haryana tightens deposit rules, drops more banks from approved list
Govt caps deposits at Rs 50 crore per bank, bars savings accounts, mandates competitive bidding for fund placement
The IDFC First Bank had earlier said that an alleged Rs 590-crore fraud was committed by its employees and others in accounts held by the Haryana government. (File photo) In a major overhaul of its public fund management system following the Rs 590-crore IDFC First Bank fraud probe, the Haryana Government has capped deposits at Rs 50 crore per department per bank and barred government departments from parking funds in savings or current accounts.
Under the new framework issued by the Finance Department on Monday, government money can now be parked only in fixed deposits or flexi deposits, except in cases where regulatory requirements mandate otherwise and prior approval is obtained from the Finance Department.
The stringent guidelines, issued by Additional Chief Secretary (Finance), follow recommendations of the High-Level Committee on State Banking Policy and Unauthorized Fund Transfers. The move comes amid an ongoing CBI probe in which five Haryana-cadre IAS officers are reportedly under scrutiny for their alleged role in the scam.
The Finance Department has also rolled back several banking empanelment decisions taken over the past two years. It has withdrawn empanelment approvals granted to Federal Bank, IDBI Bank and DCB Bank, along with related circulars that had relaxed investment norms for newly added banks.
Officials said the original empanelment list issued in July 2024 will continue to govern government banking operations.
Tighter caps on bank deposits
The government has also reinstated tighter deposit ceilings. Departments can now place a maximum of Rs 50 crore per bank in Bandhan Bank, while the limit for small finance banks — including Equitas, Jana, Ujjivan and Utkarsh — has been reduced to Rs 25 crore per department per bank.
The earlier relaxation permitting higher exposure to newly empanelled banks has been withdrawn. The Finance Department also reiterated earlier decisions de-empanelling IDFC First Bank and AU Small Finance Bank, besides excluding Kotak Mahindra Bank from government banking arrangements.
Fixed deposits only
To improve fund security and traceability, the government has barred departments from parking money in savings or current accounts. Funds can now be placed only in fixed deposits or flexi deposits, unless regulatory requirements necessitate otherwise.
Officials said the move is aimed at reducing operational misuse and tightening monitoring of public money parked in commercial banks.
Competitive process mandatory
To improve transparency and reduce concentration risk, the state has made competitive bidding mandatory before placing deposits. Departments must now seek quotations from all empanelled banks, prepare a comparative statement through the senior-most accounts officer, and obtain final approval from the head of office.
The government has also made rotation of funds compulsory. Deposits maturing in one bank cannot be reinvested in the same bank, even if it offers higher interest rates, with departments directed to diversify placements across empanelled banks.
The Finance Department has further directed departments to avoid premature withdrawal of funds from the treasury and draw money only when expenditure is imminent, in a bid to improve cash-flow discipline and curb idle parking of public funds.
A revised list of 24 empanelled banks, along with updated deposit limits effective May 18, 2026, has also been issued.
Officials said the measures are aimed at strengthening oversight, reducing systemic risk and preventing a repeat of unauthorised fund transfers. The new rules have come into immediate effect across all Haryana government departments.
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