The Madhya Pradesh government has banned Bank of Baroda from handling government business for the next five years. The order was issued by the Directorate of Institutional Finance on 27 March 2026.
Reason for the Ban
According to the official order, the bank failed to follow government instructions related to the Chief Minister Kisan Yojana funds. An amount of about ₹1751 crore was supposed to be deposited under a specific government receipt head. However, the bank did not comply with these instructions. Due to this failure, the government said it suffered serious financial and administrative loss.
Government Action
Because of this issue, the state government has decided to stop Bank of Baroda from doing any government-related financial work for five years. The Finance Department has also made changes in its earlier orders to implement this decision.
The order has been sent to all government departments, state bodies, corporations, boards, and universities. It has also been shared with senior officials, district treasury officers, and banking authorities to ensure proper implementation.
Earlier, frauds were reported in Kotak Mahindra Bank and IDFC First Bank for embezzlement of funds of Haryana Government. The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect. As per reports Rs.545 crore of Haryana Govt was embezzled by some employees of the IDFC First Bank.
A few days ago, about ₹145 crore fraud has been reported in Kotak Mahindra Bank. The matter was hidden for nearly six days before it came out. The Panchkula Municipal Corporation had opened an account in the Sector-11 branch of the bank. The bank had 16 Fixed Deposits (FDs) of the Corporation, which were earlier transferred from SBI. It was found that records of five FDs are missing. This created panic among officials.
These incidents show that Government accountants should properly monitor the accounts maintained with the Banks.
