Kotak Bank files complaint in Panchkula Municipal Corp case; second Haryana govt-linked deposit issue in weeks

Kotak Mahindra Bank has filed a formal complaint with the Panchkula Police after the Panchkula Municipal Corporation flagged discrepancies in Fixed Deposit Receipts (FDRs) held with the private sector lender.

While earlier reports pegged the discrepancy at around ₹150 crore assessed by Panchkula Municipal Corporation, a person directly in the know told CNBC-TV18 that the bank’s internal estimate is significantly lower, with an initial assessment placing the gap at roughly ₹85 crore. However, this person added, the final amount is yet to be determined and will be clearer once the ongoing reconciliation exercise is completed.

The reconciliation process was initiated over the weekend at the behest of the Panchkula Municipal Corporation, and is currently underway.

As per earlier reports, the issue surfaced when the Municipal Corporation instructed the bank to transfer funds upon the maturity of a fixed deposit, only for the bank to find that the funds were not available. Subsequent checks revealed discrepancies across multiple FDRs.

The matter has been escalated to authorities, with the Reserve Bank of India also looped in. According to people in the know, the RBI does not currently view this as a “bank-level fraud,” and it remains unclear whether any individual involvement will be established.

Kotak Mahindra Bank did not offer any comment on the amount involved, but in an earlier statement to CNBC-TV18, a Kotak Mahindra Bank spokesperson said, “Following instructions from the Municipal Corporation of Panchkula, Kotak Mahindra Bank initiated a detailed reconciliation of fixed deposits and linked bank accounts maintained by the Municipal Corporation.”

As part of this exercise and based on records examined so far, Kotak Bank said in its statement, that all account opening processes, KYC documentation, authorised signatories and instructions received from the Municipal Corporation were in order, and that the accounts and transactions were handled in strict adherence to due process and applicable banking norms.

“A significant portion of the amounts under review has already been reconciled with the Municipal Corporation, and the reconciliation process is continuing in an orderly manner,” the statement said.

“Further, in keeping with its governance standards and to ensure that the matter is examined independently and comprehensively, the Bank has filed a formal complaint with the Panchkula Police. The Bank is cooperating fully with the Municipal Corporation, government authorities and law enforcement agencies in this process.”

This comes close on the heels of a far larger fraud at IDFC First Bank, involving ₹597 crore in Haryana government accounts at its Chandigarh branch, where the Enforcement Directorate has already raided 19 locations. Subsequently, IDFC First Bank fully settled the fraud case by paying ₹645 crore (including interest) to Haryana government departments. The bank reconciled accounts, confirming no further discrepancies, while four individuals, including former employees, were arrested in the case.

Both incidents at IDFC and Kotak Bank, involving a similar deposit irregularity claim within weeks of each other, are tied to the Haryana government. While the IDFC First Bank case involved a Haryana state government department, the Kotak Mahindra Bank case involves the Panchkula Municipal Corporation under the Haryana government as well.