AU Small Finance Bank on Sunday said that there is no indication of fraud or financial impact on the bank following its de-empanelment by the Haryana Government on February 18, it said in a clarification to the exchanges. “Based on available facts at this stage and preliminary review, there is no indication of any financial impact or any fraudulent activity towards the Bank,” the filing said.
The lender said that it received a February 16 communication from a state department seeking details of a government account, followed by another on February 18 regarding suspected unauthorized transactions between that account and a customer account. The Finance Department also informed the bank of its de-empanelment the same day.
What did the filing say?
The filing said that the government account was opened after due KYC and was initially credited with Rs 25 crore from a large private sector bank, with subsequent credits of about Rs 47 crore from another private sector bank that recently disclosed suspected fraudulent activity.
Of this, around Rs 47 crore was transferred to a customer account through 14 transactions, all initiated and authorised by the department, it said. The account was closed on January 15, with Rs 25 crore plus interest remitted back.
The bank continues its internal review, and has informed its board. Certain employees have been placed off-duty.
Total value of deposits from Haryana government entities
The deposits from Haryana government entities stood at around Rs 735 crore as of February 17, falling to Rs 538 crore as of February 21 across 200 accounts, about 0.4% of overall deposits.
The bank said that it is engaging with the state government for clarity and re-empanelment. On Friday, the shares of AU Small Finance Bank closed 1.2% higher at Rs 1,028.75 on NSE.