IDFC First Bank on Sunday disclosed a ₹590-crore fraud committed by its employees and others in accounts held by the Haryana government with the private sector lender.

In a regulatory filing, IDFC First Bank said it has disclosed the matter to the banking regulator and also filed a police complaint.

“Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals/entities/counterparties,” the IDFC First Bank filing said.

The Haryana government on Sunday has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect, following the disclosure of the alleged fraud — no government funds will be parked, deposited, invested or transacted through these banks going forward, according to a Moneycontrol report. All departments and organisations have been directed to immediately transfer balances and close accounts maintained with them.

At present, IDFC First Bank estimates the fraud size at ₹590 crore and added that a “reconciliation exercise” will determine the final amount based on receipt of further information, validation of claims and recoveries of any nature.

Providing details of the fraud, it said a Haryana government department had been banking with IDFC First Bank, and the lender received a request for a closure and balance transfer to another bank on an undisclosed date.

“In the process, certain discrepancies were observed in the amount mentioned vis-a -vis the balance in the account,” it said, adding that similar issues were observed in other accounts of Haryana government entities, which engaged with the bank from February 18 onwards.

IDFC First Bank said that a preliminary internal review was conducted, and the matter is “confined to a specific group of government-linked accounts within the Haryana government”, operated through the said branch in Chandigarh, and stressed that it does not extend to other customers of the Chandigarh branch.

Four officials working for the IDFC First Bank have been placed under suspension pending investigation, the bank said, assuring strict disciplinary, civil and criminal action against the employees and other external individuals responsible.