After IDFC First Bank, Kotak Mahindra Now Caught in Haryana's ₹160 Cr Banking Fraud

Almost a month after IDFC First Bank's ₹590 crore fallout, Kotak Mahindra Bank is at the centre of an alleged fraud involving fixed deposits held on behalf of Haryana's Panchkula Municipal Corporation.

The private sector lender has filed a formal complaint with the Panchkula Police and begun reconciling the affected accounts, even as the exact scale of the alleged discrepancy remains under investigation.

The issue surfaced when the Municipal Corporation asked the bank to transfer funds upon the maturity of one of its fixed deposit receipts (FDRs). That is when things didn't add up.

"Some of the FDRs were with the bank for a long time in the Panchkula branch. Discrepancy was found when the bank was asked to transfer the funds upon maturity of one of the FDRs," Vinay Kumar, Commissioner of the Panchkula Municipal Corporation, told news agency PTI on Tuesdsay.

According to CNBC-Awaaz, the alleged fraud amount is ₹160 crore, though this figure has not been confirmed officially.

What The Bank Is Saying

A spokesperson of the bank said that following instructions from the Municipal Corporation, the lender undertook a thorough reconciliation of the fixed deposits and linked accounts, as quoted multiple reports.

"Based on records reviewed so far, all account opening procedures, KYC documentation, authorised signatories and instructions were found to be in order, with transactions carried out in line with applicable banking norms," the spokesperson said.

The lender added that a significant portion of the amounts under review has already been reconciled. "The Bank is cooperating fully with the Municipal Corporation, government authorities and law enforcement agencies in this process," the spokesperson reportedly said.

Despite the allegations, investors appeared unfazed. Kotak Mahindra Bank shares were trading 1.18% higher at ₹371.50 per share on the BSE at 3:12 PM on Wednesday.

What Was The IDFC Bank Fallout

The Kotak case is not an isolated incident. It follows closely on the heels of a separate alleged fraud at IDFC First Bank, which recently disclosed a ₹590 crore discrepancy linked to certain employees and accounts associated with a Haryana government department at its Chandigarh branch.

In that case too, the issue came to light when a government department requested closure of its account and a transfer of funds, only for mismatches to emerge during the process.

IDFC First Bank later clarified that the matter was confined to a specific set of government-linked accounts and did not affect other customers. IDFC First later paid ₹645 crore to clients linked to the suspected fraud.