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Govt funds embezzlement: Haryana withdraws empanelment of banks selected after July 2024
Instructions issued on May 18 by the Additional Chief Secretary (ACS, Finance), Arun Gupta, stated that all decisions regarding empanelment and increases in deposit investment limits subsequent to the July 12, 2024, empanelment instructions are withdrawn with immediate effect
The Haryana government on Monday withdrew the empanelment of banks, including Federal Bank, IDBI Bank and DCB Bank, for conducting government business in the state, restoring the July 12, 2024, bank empanelment policy framework.
Instructions issued on May 18 by the Additional Chief Secretary (ACS, Finance), Arun Gupta, stated that all decisions regarding empanelment and increases in deposit investment limits subsequent to the July 12, 2024, empanelment instructions are withdrawn with immediate effect.
“To ensure periodic reconciliation, renewal of fixed deposits in the same bank shall be debarred. Funds upon maturity shall be placed in any other empanelled bank, even if the rate of interest offered is marginally lower. A minimum notice period of three working days shall be provided before inviting quotations,’’ said Gupta.
Finance department officials said the decisions followed recommendations of the high-level committee on state banking policy and unauthorised fund transfers. The committee headed by the Gupta was constituted to probe the alleged unauthorised transfer of public funds from IDFC First Bank and AU Small Finance Bank and to review state’s banking policy. The committee was tasked with examining the empanelment of IDFC First Bank and AU Small Finance Bank, decisions taken by departments to deposit substantial government funds in these banks, issues relating to non-reconciliation by government departments. any lapses, procedural deficiencies, or systemic failures in this regard. The committee was also mandated to examine provisions of the state’s banking policy and its enforcement, assess compliance with the prescribed policy framework by departments, identify accountability, and recommend corrective and preventive measures to ensure such lapses do not recur.
The May 18 instructions stated that, from now on, no department shall place more than ₹50 crore with Bandhan Bank, and no department shall place more than ₹25 crore with any single small finance bank (Equitas, Jana, Ujjivan, and Utkarsh Bank). The de-empanelment of IDFC First Bank AU Small Finance Bank and Kotak Mahindra Bank shall be complied with strictly, it said.
The fresh instructions said that all fund placements will be made strictly in fixed deposits or flexi deposits and no placement will be made in savings accounts or current accounts, except where mandated by regulatory requirements and with prior written approval of the finance department.
Detailing the procedure for fixed deposit investments, the ACS said that quotations for fixed deposits will be invited from all empanelled banks and a comparative statement be prepared by the senior-most accounts officer who will make recommendations in accordance with the prescribed guidelines.
The proposal will be approved by the head of the office.
“To ensure periodic reconciliation, renewal of fixed deposits in the same bank shall be debarred. Funds upon maturity shall be placed in any other empanelled bank, even if the rate of interest offered is marginally lower. A minimum notice period of three working days shall be provided before inviting quotations,” the ACS said. Government departments are advised to draw funds from the treasury only at the last hour when the expenditure is to be made or payment is to be done. Premature withdrawal of funds from the treasury and parking in the banks should be avoided as much as possible, the instructions said.
