AU Small Finance Bank Clarifies Media Reports on Haryana Government De-Empanelment
Mumbai, February 22, 2026: AU Small Finance Bank Limited has issued a detailed clarification regarding media reports and investor queries linked to its recent de-empanelment by the Government of Haryana for government business in the state.
The clarification was submitted to the National Stock Exchange of India Limited and BSE Limited under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Background and Chronology
The bank stated that on February 16, 2026, it received a communication from a department of the Government of Haryana seeking account opening and transaction details relating to a specific government account. The requested information was provided.
On February 18, 2026, the bank received another communication from the department regarding suspected unauthorized transactions between the government account and a customer account maintained with the bank. On the same day, the Finance Department of the Government of Haryana informed the bank about its de-empanelment for government business in the state.
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Preliminary Findings
Following these developments, AU Small Finance Bank initiated an internal review. The bank clarified that:
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Both the government account and the customer account were opened after completion of applicable KYC checks and requisite authorisations in line with internal policies.
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The government account was opened with an initial credit of ₹25 crore transferred from a large private sector bank.
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Additional credits of approximately ₹47 crore were received through multiple transactions from another private sector bank that had recently disclosed unauthorized and suspected fraudulent activities.
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Around ₹47 crore was subsequently transferred from the government account to the customer account through 14 transactions.
According to the bank’s preliminary findings, all 14 transactions were initiated and duly authorised by the concerned government department and executed in the normal course of business. The bank maintains a complete audit trail, including account opening forms, KYC documentation, cheques, transaction instructions, and verification call records, which have been submitted to the department.
The government account was closed on January 15, 2026, as per departmental instructions, and the outstanding balance of ₹25 crore along with accrued interest was transferred back to the originating private sector bank.
No Financial Impact Indicated
The bank stated that based on the available facts and preliminary review, there is currently no indication of any financial impact or fraudulent activity involving the bank.
The Board has been informed of the matter, and the internal review is ongoing. To ensure transparency, certain employees have been placed off-duty pending review.
The bank is also engaging with the Government of Haryana to understand the reasons for de-empanelment and has affirmed full cooperation with authorities.
Deposit Position
As of February 17, 2026, total deposits from the Government of Haryana stood at approximately ₹735 crore. Following the de-empanelment, deposits reduced to around ₹538 crore as of February 21, 2026, spread across nearly 200 accounts. This represents approximately 0.4% of the bank’s overall deposits as of December 31, 2026.
AU Small Finance Bank reiterated its commitment to strong governance, transparency, and safeguarding public funds, and stated that it will continue engaging with the state government for potential re-empanelment while maintaining communication with stakeholders.