AU Small Finance Bank issued a clarification regarding media reports about its de-empanelment for government business by the Government of Haryana. The bank confirmed that two specific accounts, including a Government Account, were opened following due KYC processes. Following an internal review, the bank stated there is no indication of financial impact or fraudulent activity towards AU SFB related to the transactions or the subsequent de-empanelment order received on February 18, 2026.
Clarification on Haryana Government Business
AU Small Finance Bank Limited (the Bank) has issued a formal press release to address recent media reports and investor inquiries concerning the de-empanelment of the Bank for handling government business by the Government of Haryana. This action followed disclosures regarding unauthorized activities at another private sector bank.
Background and Chronology of Events
The Bank detailed a sequence of communications leading to the de-empanelment:
- On February 16, 2026, the Bank received a communication from a Haryana Department seeking details on one specific “Government Account”, which were subsequently submitted.
- On February 18, 2026, a separate request sought information regarding suspected unauthorized transactions between this Government Account and another “Customer Account” held by a different client.
- Also on February 18, 2026, the Finance Department, Govt. of Haryana, officially communicated the Bank’s de-empanelment for government business in the state.
Initial Findings and Transaction Review
An internal review was immediately initiated. Key findings regarding the specific accounts under scrutiny include:
- Both accounts were opened after completion of all applicable KYC checks and authorizations, consistent with the Bank’s policies.
- The Government Account initially received a credit of ₹25 crore from a large private sector bank.
- Subsequent additional credits of approximately ₹47 crores were received through multiple transactions originating from another private sector bank that disclosed recent fraudulent activities.
- Out of the total credits, about ₹47 crores were transferred to the Customer Account through 14 transactions.
- Preliminary findings indicate these 14 transactions were duly authorized and executed by the concerned Government Department in the normal course of business.
- The Government Account was closed on January 15, 2026, with the outstanding balance of ₹25 crore transferred back to the original large private sector bank.
Impact and Path Forward
Based on the current review, the Bank affirms there is no indication of any financial impact or any fraudulent activity towards AU Small Finance Bank. Certain employees have been placed off-duty to ensure a transparent review process, and the Bank’s Board has been fully informed.
The Bank is actively engaging with the Government of Haryana regarding the de-empanelment reasons and commits to full cooperation. Regarding deposits, as of February 17, 2026, the Bank held total deposits of approximately ~Rs. 735 Crores from the Government of Haryana, which reduced to ~Rs. 538 Cr by February 21, 2026, across approximately 200 accounts (representing about ~0.4% of the Bank’s overall deposits as of December 31, 2026).
The Bank reiterates its commitment to strong governance, transparency, and the safeguarding of public funds, and will continue efforts toward re-empanelment with the Government of Haryana.
Source: BSE
