In a significant development in the alleged ₹590-crore banking fraud involving IDFC FIRST Bank, AU Small Finance Bank, and Kotak Mahindra Bank, the Central Bureau of Investigation (CBI) has sought permission from the Haryana Government to investigate the alleged role of four IAS officers connected to the case.
According to official sources, the agency has requested sanction under Section 17A of the Prevention of Corruption (PC) Act, which makes prior approval mandatory before any inquiry or investigation can be initiated against serving public servants for actions taken during the discharge of official duties.
The request marks a major step forward in one of Haryana’s biggest alleged financial fraud investigations involving diversion of government funds through unauthorised banking channels.
Sources familiar with the matter indicated that the Haryana
Government is likely to grant the required approval. Investigators may also seek permission in the coming weeks to probe two additional IAS officers whose names have reportedly surfaced during the investigation.
What Is Section 17A of the Prevention of Corruption Act?
Section 17A of the Prevention of Corruption Act was introduced to ensure protection for honest government officials from arbitrary or motivated investigations linked to administrative decisions taken in their official capacity.
Under this provision, agencies such as the CBI are required to obtain prior approval from the competent authority before launching any inquiry, preliminary investigation, or formal probe against serving public servants.
Legal experts say the provision attempts to strike a balance between protecting genuine administrative decision-making and allowing investigation where credible evidence of corruption or misconduct exists.
In high-profile cases involving senior bureaucrats, obtaining sanction under Section 17A becomes a critical procedural requirement before the investigation can proceed further.
Alleged Irregularities Linked to Unauthorised Accounts
According to investigative sources, the alleged role of the IAS officers relates to the opening and operation of bank accounts that were reportedly created in violation of guidelines issued by the Haryana Finance Department.
Investigators suspect that government funds belonging to multiple departments were diverted through unauthorised accounts allegedly operated with the help of bank officials, private entities, and government functionaries.
The probe is examining whether treasury norms and financial procedures were bypassed deliberately to facilitate movement of public funds outside authorised systems.
Officials said investigators are analysing banking records, approval files, financial transactions, and digital communication trails to determine how the alleged diversion took place and who authorised the accounts.
How the ₹590-Crore Fraud Allegedly Operated
The alleged scam involves siphoning of nearly ₹590 crore from government-linked funds through accounts maintained in private banks, including:
IDFC FIRST Bank
AU Small Finance Bank
Kotak Mahindra Bank
Investigators believe the fraud may have continued over an extended period through a coordinated network involving banking personnel, intermediaries, and government-linked individuals.
According to sources, the funds were allegedly routed through unauthorised banking channels and misappropriated using procedural loopholes and irregular account operations.
The exact extent of the financial loss and the number of government departments affected are still being verified through forensic audits and examination of financial records.
Administrative Action Already Initiated
Following preliminary findings and exposure of the alleged irregularities, the Haryana Government initiated several administrative measures.
As part of the action taken so far:
Two IAS officers were suspended
Four IAS officers were transferred
Multiple departmental reviews and internal audits were ordered
The administrative actions were linked to alleged irregularities associated with transactions involving the three banks under investigation.
Officials said the measures were precautionary in nature and intended to ensure fair investigation while reviewing departmental financial controls.
CBI Took Over Investigation in April 2026
The Central Bureau of Investigation formally registered an FIR in the case on April 8, 2026, after taking over the probe from the Haryana State Vigilance and Anti-Corruption Bureau.
The state vigilance agency had initially registered the case on February 23, 2026, following allegations of large-scale financial irregularities involving government funds.
Given the scale of the alleged fraud, involvement of multiple financial institutions, and possible links with senior government officials, the matter was later transferred to the CBI for a comprehensive investigation.
The agency is now focused on identifying the complete chain of transactions, role of bureaucrats and banking officials, and possible collusion between government insiders and private individuals.
Probe May Expand Further
Sources in the investigative establishment indicated that the probe could widen further as more financial records and digital evidence are scrutinised.
Investigators are reportedly examining:
The process through which the accounts were opened
Officials who authorised the transactions
Whether finance department rules were deliberately bypassed
The role of banking staff in facilitating suspicious transfers
Possible financial gains received by individuals involved
Officials said additional sanction requests, departmental proceedings, and further legal action cannot be ruled out depending on the findings of the investigation.
The ₹590-crore case has already emerged as one of the most serious alleged financial scams involving government funds in Haryana in recent years, raising concerns about banking oversight, administrative accountability, and financial monitoring systems within government departments.
