After the ₹645 crore scams involving IDFC FIRST Bank and AU Small Finance Bank, and the ₹150 crore Kotak Mahindra Bank scam, the Haryana Finance Department has issued new instructions regarding fixed deposits (FDs).
The department said that fixed deposits will no longer be renewed in the same bank after maturity. Instead, the money must be moved to another empanelled bank, even if the new bank offers a slightly lower interest rate. The decision was taken to ensure regular reconciliation and better monitoring of government funds.
This means that the government funds will be kept in a bank for only year. Each year the funds will be shifted to another bank. This decision has been taken due to large scale fraud discovered recently in IDFC Bank. Funds of Haryana Government were embezzled by some employees of the IDFC Bank.
With this new decision, funds will be moved to different banks each year so if fraud occurs in any bank, it can be identified easily and quickly. In case of IDFC Bank, the fraud was discovered very late as the funds were kept with the bank for a long time. The IDFC bank employees kept providing fake receipts and fraud could not be identified.
The new instructions were issued on May 18 after a report was submitted by a high-level committee headed by Arun Gupta, Principal Secretary to the Chief Minister and Additional Chief Secretary of the Finance Department.
A senior Finance Department officer said that shifting FDs to different banks after maturity was one of the biggest lessons from the Kotak Mahindra Bank scam.
According to an FIR registered by the State Vigilance and Anti-Corruption Bureau (SV&ACB) on March 24, the Municipal Corporation (MC), Panchkula, had 16 fixed deposits worth ₹145.03 crore in Kotak Mahindra Bank’s Sector 11 branch in Panchkula. The maturity value of these FDs was ₹158.02 crore.
Out of these, 11 FDs worth ₹59.58 crore matured on February 16. When MC officials contacted the bank, they received statements that did not match each other or the corporation’s records. This raised suspicion of large-scale financial irregularities. According to the SV&ACB, the scam had been continuing since 2018.
Under the new rules, government departments must invite quotations for fixed deposits from all empanelled banks. The senior-most Accounts Officer will prepare a comparative statement and make recommendations according to the guidelines. The proposal must then be approved by the Head of the Office. A minimum notice period of three working days must be given before inviting quotations.
The instructions also advise government departments to withdraw money from the treasury only when payments are due. Departments have been told to avoid keeping government funds in banks unnecessarily.
The Finance Department has also directed that no funds should be placed in savings or current accounts unless required by regulations and approved in writing by the Finance Department.
The empanelment of Federal Bank, IDBI Bank, and DCB Bank has been withdrawn. IDFC FIRST Bank, AU Small Finance Bank, and Kotak Mahindra Bank will continue to remain de-empanelled.
The Finance Department has released a new list of 24 empanelled banks, including 12 public sector banks.
The maximum investment limit for government departments in Equitas Small Finance Bank, Jana Small Finance Bank, Ujjivan Small Finance Bank, and Utkarsh Small Finance Bank has been fixed at ₹25 crore each. In Bandhan Bank, the maximum limit is ₹50 crore.
The department has also made it mandatory for government departments and organisations to take prior approval from the Finance Department before opening accounts in any private or corporate bank. Departments must provide detailed reasons for not opening the account in a nationalised bank along with complete details of the proposed account or scheme.
