Gurgaon Municipal Corporation Severs Ties with Private Bank Following Massive Fraud Detection
The Municipal Corporation of Gurgaon (MCG) has taken decisive action by closing its account with IDFC First Bank, a private financial institution, in the wake of a staggering banking fraud case. The civic body has withdrawn a substantial sum of Rs 108 crore from the bank and transferred these funds to a public sector bank (PSB). This precautionary move comes amid serious concerns over an alleged Rs 590-crore fraud involving government deposits at the private bank, according to official statements.
Political and Administrative Alarm Triggers Immediate Response
The decision was catalyzed after the matter was raised in the Haryana legislative assembly, triggering widespread political and administrative alarm over financial controls and the safeguarding of public money. MCG officials confirmed that the corporation conducted a thorough review of its banking arrangements and opted to terminate its relationship with IDFC First Bank as a protective measure.
An MCG official elaborated on the financial strategy, stating: "We have secured the funds that were generated from the sale of MCG land. In strict accordance with the latest policy directives, these proceeds will now be deposited directly into the Urban Local Body's (ULB) account. The policy mandates that all revenue from municipal land sales must be credited exclusively to the ULB account."
Significant Revenue from Bank Deposits Under Review
The financial implications for MCG are considerable. In the last fiscal year, the corporation generated revenue of Rs 54 crore solely from interest on bank deposits or fixed deposits (FDs). Projections for the current fiscal year estimate earnings of approximately Rs 45 crore from similar interest sources. These figures highlight the critical importance of secure banking partnerships for municipal finances.
Unraveling of the Rs 590 Crore Fraud Scandal
The alleged fraud first surfaced when IDFC First Bank's Chandigarh branch detected significant discrepancies during routine account closure and reconciliation processes. The irregularities, amounting to roughly Rs 590 crore, were linked to various Haryana government department accounts. In response, the bank suspended four officials pending a comprehensive investigation and filed formal complaints with both police authorities and financial regulators.
State Government Implements Stringent Banking Reforms
The Haryana government has responded with sweeping administrative measures. Authorities have de-empanelled both IDFC First Bank and AU Small Finance Bank from all government business activities. Furthermore, the state has mandated that all departmental accounts currently held in private banks must be either closed or transferred to nationalized lenders.
A First Information Report (FIR) has been registered by the state's anti-corruption bureau and vigilance department. Chief Minister Nayab Singh Saini has ordered a high-level probe into the matter, pledging strict action against any individuals found culpable. In a significant development, Saini informed the state assembly on Tuesday that the government has successfully recovered nearly Rs 556 crore of the misappropriated funds.
Broader Implications for Municipal Financial Governance
This incident has sparked broader conversations about financial governance and risk management within municipal corporations across Haryana. The transfer of substantial public funds from private to public sector banks represents a strategic shift in how local governments approach banking security and deposit protection.
The case continues to develop as investigations proceed, with potential implications for banking regulations, government deposit policies, and corporate accountability in the financial sector.
