You could say this upends the status quo on bank compliance when it comes to government cash. The CBI has now filed two chargesheets in the probe into what it calls a misappropriation by IDFC First Bank. We’re talking about an alleged siphoning of Rs 657 crore from the Haryana and Chandigarh Smart City Limited ledgers, though the bank will have you know it has made good on Rs 583 crore to Haryana’s side of the house.
What the new chargesheets cover
The papers were put before separate special courts on Friday, with the case being drawn along Haryana and Chandigarh lines. In the Panchkula court, investigators made it clear that in the Haryana part of the story – a loss of some Rs 504 crore – the fruits of the crime went to two private parties.
This is the second time around for Haryana. Before this, the agency had 15 on the hook: six from the bank, three state servants, a couple of companies and four others. Then there is the CSCL file from Chandigarh, which has seven names in it.
As for the CSCL side, the first chargesheet has five bank men, one from CSCL and a private citizen. The numbers add up to a Rs 153 crore fraud. All of it, the CBI says, is tied to money sitting at IDFC First Bank.
Why this matters for the banking sector
According to the CBI, you had a setup of shell companies and made-up transactions. It is a test of how well Indian banks can cordon off public funds. They also point to gold and real estate as ways the system was gamed, leaving holes that can get the rest of the financial system in a muddle.
How the siphoning allegedly worked
Word is that big wads of money were funneled to shell and small-time jewellery outfits before being taken out, some of it in property and gold. There is a lot of cash in the record. You have charges of criminal conspiracy, forgery, cheating and even the Prevention of Corruption Act thrown in.
The cases by the numbers
Some of the hard figures from the filings and briefings:
– Total siphoned: Rs 657 crore
– Haryana loss: Rs 504 crore
– CSCL loss: Rs 153 crore
– Previous accused: 15 entities earlier
– New Haryana filing: two private individuals
– CSCL filing: seven accused
– Reimbursement by IDFC First Bank: Rs 583 crore
Where the probe started, and what comes next
For the Haryana piece, it was the State Vigilance and Anti-Corruption Bureau that had it in eight departments before it was handed to the CBI. The CSCL one came from the Economic Offences Police in Chandigarh; CREST is in that docket too.
A CBI man on record says they are not done yet and you can expect more chargesheets. They are also looking at a hotelier in the Tricity and AU Small Finance Bank.
Bank response and broader implications
IDFC First Bank has no problem with the fact it has handed over 100 per cent of what was due in principal and interest to the Haryana depts, some Rs 583 crore. They are in talks with the authorities to go after those responsible and make back what is owed them.
These filings are a warning to any bank with public money on the books, particularly if you don’t have your counterparty checks in order. With more to come, this is going to change the way risk is viewed for government treasuries and the banks they do business with.
