AU Small Finance Bank shares drop nearly 8% after Haryana government de-empanels bank

Shares of AU Small Finance Bank dropped as much as 7.76% to hit an intraday low of ₹950 on the National Stock Exchange (NSE) on Monday, February 23. On the BSE, AU Small Finance Bank shares fell as much as 7.62% after Haryana government de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect till further orders, according to an official circular.

No government funds will be parked, deposited, invested or transacted through these institutions, it said.

"IDFC First Bank and AU Small Finance Bank are hereby de-empanelled for government business in Haryana with immediate effect till further orders," according to a circular issued by the Finance Department.

IDFC First Bank on Sunday disclosed a Rs 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 made in the early hours, IDFC First Bank said it has disclosed the matter to the banking regulator and filed a police complaint.

Meanwhile, according to the Haryana government circular, no government funds shall henceforth be parked, deposited, invested, or transacted through these banks.

All concerned departments/organisations shall take immediate action for transfer of balance and closure of accounts maintained with these banks, as per the circular dated February 18.

It further said that it has come to the notice of the Finance Department that certain banks are not adhering to the conditions under which fixed deposits are being made by the Departments and Corporations.

AU Small Finance Bank has, however, denied any wrongdoing in the alleged fraudulent opening of accounts after Haryana de-empanelled it from undertaking any government business.

AU Small Finance Bank said the accounts in question were opened after completing all necessary KYC checks and authorisations.

Meanwhile, AU Small Finance Bank shares were witnessing higher than usual trading activity as trading volume in its shares spiked by 3.4 times to 74.66 lakh shares compared with an average trading volume of 22.05 lakh shares.

As many as 9.32 lakh shares changed hands on the BSE compared with an average of 1.85 lakh shares traded daily in the past two weeks.

As of 11:22 am, AU Small Finance Bank shares traded 6.63% lower at ₹959, underperforming the NIFTY Bank index which was up up 0.1%.