Kotak Mahindra Bank responds over alleged fraud: Initiated ‘detailed reconciliation’ of FDs to Panchkula Municipal Corp

Kotak Mahindra Bank today said it has initiated a detailed reconciliation of fixed deposits and linked bank accounts maintained by the Municipal Corporation of Panchkula, following instructions from the civic body.

In a statement, the spokesperson said that the Bank has examined records to confirm that all processes and documentation related to the Panchkula Municipality's account are in order and were handle as per norms.

What has Kotak Mahindra Bank stated?

“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,” the spokesperson told Mint.

They added that as part of this exercise, the Kotak Mahindra Bank “has confirmed, based on records examined so far, 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”.

According to the spokesperson, the Bank has taken the following actions so far:

• A significant portion of the amounts under review has been reconciled with the Municipal Corporation of Panchkula, and “reconciliation process is continuing in an orderly manner”.
• Further, in line with the Bank's governance standards it has filed a formal complaint with the Panchkula Police. It also aims “to ensure that the matter is examined independently and comprehensively”.

• The spokesperson added that Kotak Mahindra Bank “is cooperating fully with the Municipal Corporation, government authorities and law enforcement agencies in this process.”

₹150 crore fraud: What were the allegations?

Kotak Mahindra Bank is facing an alleged ₹150 crore fraud linked to Haryana's Panchkula Municipal Corporation, with the civic body finding discrepancies in its fixed deposit reciepts (FDRs), fund diversion and possible collusion, PTI reported on Tuesday.

Vinay Kumar, Commissioner of the Panchkula Municipal Corporation told the agency that they discovered discrepancies in some long-held FDRs with the bank when funds were asked to be transferred upon maturity. “We have reported the matter to the State Vigilance,” Kumar added.

Second such case in Haryana after ₹590 crore IDFC First fraud

Notably, this is the second time a bank-related fraud has come to light in Haryana after a ₹590 crore fraud allegedly committed by employees of a Chandigarh branch shook IDFC First Bank. The Haryana State Vigilance and Anti-Corruption Bureau (ACB) are currently probing the matter and has made several arrests.

IDFC First Bank stated that the scam is “confined to a specific group of government-linked accounts within the Haryana government operated through the Chandigarh branch” and stressed that it does not extend to other customers of the branch.

This was also discovered after the government department requested closure of account and transfer of funds to another bank.