In an extraordinary development that has effectively shut down two private banks across an entire Indian state, heavy police force has been deployed outside all branches of Kotak Mahindra Bank and AU Small Finance Bank across Haryana, with not a single branch of either bank having been able to open as of Monday, March 30, 2026. The deployment is directly linked to the deepening ₹590 crore bank fraud case centred on the Panchkula Municipal Corporation’s fixed deposits and is one of the most significant law enforcement actions against private banking operations in recent Indian financial history.
खबर है कि पूरे हरियाणा में Kotak Mahindra Bank और AU small finance bank के सभी शाखाओं के बाहर भारी पुलिस बल तैनात है और अभी तक कोई भी ब्रांच खुल नहीं पाई है।@aubankindia @KotakBankLtd pic.twitter.com/fqHUYUyEUf
— Ravindra Singh Sheoran (@TellingRavindra) March 30, 2026
How Many Branches Are Affected
Kotak Mahindra Bank has approximately 76 branches across Haryana, spread across major cities and districts including Gurugram, Faridabad, Panchkula, Ambala, Rohtak, Hisar, Karnal, and Sonipat. Kotak Mahindra Bank currently has 76 branches in Haryana state. Every single one of these branches is currently surrounded by police personnel and has been unable to open for business on Monday.
AU Small Finance Bank has approximately 21 branches in Haryana across districts including Gurugram, Panchkula, and other locations in the state. All of these branches are similarly shut down with police deployed outside them.
The combined closure means that customers of both banks across Haryana are unable to access in-branch banking services, make cash deposits or withdrawals at counters, access safe deposit lockers, or conduct any branch-dependent banking activity until the police deployment is lifted and authorities allow normal operations to resume.
The ₹590 Crore Fraud That Triggered This
The police deployment is the most dramatic escalation yet in a fraud investigation that has been building since a discrepancy was first discovered in the fixed deposits of the Panchkula Municipal Corporation held with Kotak Mahindra Bank.
“Some of the FDRs were with the bank for a long time in the Panchkula branch. Discrepancy was found when the bank was asked to transfer the funds upon maturity of one of the FDRs,” Vinay Kumar, Commissioner of the Panchkula Municipal Corporation, told PTI on March 24, 2026. That single discrepancy, when investigators pulled at the thread, unravelled into what is now being investigated as a ₹590 crore fraud involving fixed deposits of public municipal funds.
Kotak Mahindra Bank has filed an FIR in the case and initiated reconciliation of the fixed deposits and linked accounts of the Panchkula Municipal Corporation. The bank has stated that accounts and transactions were handled as per due process and regulatory requirements. Despite the bank’s position, the investigation has expanded significantly beyond Kotak Mahindra to draw in AU Small Finance Bank as well, leading to the coordinated state-wide police action that has shut both banks’ branch networks simultaneously.
The AU Small Finance Bank dimension of the case centres on Arun Sharma, the bank’s former regional head, who has been named in the investigation as having allegedly received approximately ₹10 crore in exchange for aiding the main accused in the fraud.
According to information presented before the court by investigators, Sharma allegedly collaborated with key accused individuals in executing several illegal activities linked to the ₹590 crore fraud. He is accused of using his knowledge of banking procedures and his official position to help exploit systemic loopholes, enabling large-scale financial irregularities that investigators say allowed the fraud to operate at the scale it did across multiple institutions.
The allegation of internal collusion at the senior banking level is the most alarming dimension of the case for Indian financial regulators and the banking system more broadly. A fraud of ₹590 crore involving public municipal funds requires institutional knowledge and access that ordinary external fraudsters cannot easily obtain. The accusation that a former regional head of a bank allegedly facilitated the fraud for ₹10 crore raises fundamental questions about the internal controls, audit mechanisms, and whistleblower systems within both institutions.
What Happens to Customers
The immediate concern for ordinary customers of both banks in Haryana is the complete unavailability of branch banking services. Digital banking through mobile apps and internet banking portals is not affected by the physical branch closures, meaning customers can still access their accounts, transfer money, pay bills, and check balances through digital channels. However cash withdrawals from branches, demand draft issuance, fixed deposit operations, and any service that requires physical branch presence are unavailable until the situation is resolved.
Customers with time-sensitive banking requirements including maturing fixed deposits, EMI payments that require branch processing, and cash needs should explore their bank’s digital alternatives or ATM network for immediate requirements. Both Kotak Mahindra Bank and AU Small Finance Bank have extensive ATM networks in Haryana that are not affected by the branch-level police action.
The Broader Significance
The state-wide deployment of police outside all branches of two private banks simultaneously is an action without clear recent precedent in Indian banking enforcement. The Haryana government and local law enforcement have taken an extraordinarily aggressive posture in this case, one that suggests either the scale of the alleged fraud is substantially larger than the ₹590 crore figure currently in the public domain, or that the investigation has revealed connections and individuals whose apprehension requires preventing access to bank records, accounts, or physical banking infrastructure that branch operations might otherwise allow.
The Reserve Bank of India and SEBI have not yet issued formal public statements on the branch closures. Whether the RBI will intervene to ensure customer access to banking services is the most immediate regulatory question the situation raises.
For the 76 Kotak Mahindra branches and approximately 21 AU Small Finance Bank branches sitting shuttered behind police cordons across Haryana on Monday, the answer to when they reopen depends on an investigation whose full dimensions are still emerging.
Business Upturn will update this article as the situation develops and as official statements are issued by the banks, Haryana police, and banking regulators.