Kotak Mahindra Bank branches across Haryana are now open and fully functional following an extraordinary period of closure triggered by heavy police deployment outside all branches of both Kotak and AU Small Finance Bank across the state earlier on Monday. AU Small Finance Bank branches are also resuming operations, though the bank says it is still assessing the full situation. The developments represent a partial resolution of the dramatic standoff that had left tens of thousands of customers unable to access in-branch banking services across Haryana.
In the most significant financial development in the case, Kotak Mahindra Bank has paid approximately ₹120 crore to the Haryana government in connection with the Panchkula Municipal Corporation fixed deposit fraud case. The payment is understood to be a settlement-related step, though the underlying investigation into the alleged ₹590 crore fraud remains active and ongoing. The payment does not constitute a full and final settlement and the matter is still being examined by investigating authorities.
What Happened Earlier Today
As reported earlier by Business Upturn, heavy police force was deployed outside all branches of both Kotak Mahindra Bank and AU Small Finance Bank across Haryana in the morning hours of Monday, March 30, 2026, with not a single branch of either bank having been able to open at the start of the day. The deployment was linked to the deepening ₹590 crore bank fraud investigation centred on fixed deposits of the Panchkula Municipal Corporation, with Kotak Mahindra Bank having filed an FIR and initiated reconciliation of the corporation’s fixed deposits and linked accounts.
Dainik Jagran first reported the police deployment, confirming the presence of Haryana police forces outside AU Small Finance Bank and Kotak Bank branches across the state. The closure created significant disruption for customers across Haryana’s 22 districts who depend on in-branch banking services.
The ₹120 Crore Payment
Kotak Mahindra Bank’s payment of approximately ₹120 crore to the Haryana government appears to have been a key factor in enabling the reopening of branches. The payment is connected to the Panchkula Municipal Corporation case in which fixed deposit discrepancies were first discovered when the corporation attempted to transfer funds on maturity of one of its FDRs. The ₹120 crore figure, while significant, represents a fraction of the total ₹590 crore under investigation, indicating that the payment addresses a portion of the alleged fraud rather than constituting a comprehensive resolution.
The investigation into the broader fraud case continues, with the former regional head of AU Small Finance Bank, Arun Sharma, remaining under scrutiny for allegedly receiving approximately ₹10 crore in exchange for facilitating the fraud. The disclosure of alleged internal collusion at the senior banking level remains one of the most alarming aspects of the case for Indian banking regulators.
AU Small Finance Bank Assessing Situation
While Kotak branches have fully reopened and are functional, AU Small Finance Bank branches are resuming operations on a more cautious basis with the bank still assessing the overall situation. The more measured language around AU Small Finance Bank’s reopening reflects the fact that the former regional head of AU Small Finance Bank remains a named accused in the investigation, creating a more complex institutional situation for the bank compared to Kotak Mahindra, which has taken the more proactive step of making the ₹120 crore payment.
Customers of AU Small Finance Bank across Haryana are advised to check with their specific branch before visiting, as the resumption of operations may be proceeding at different speeds across different locations while the bank completes its internal assessment.
What Remains Unresolved
The reopening of branches and Kotak’s ₹120 crore payment represent operational and partial financial resolution of the immediate crisis. The fundamental legal and regulatory questions raised by the case remain wide open. The ₹590 crore fraud investigation is ongoing. The alleged internal collusion involving AU Small Finance Bank’s former regional head is before the courts. And the question of how fixed deposits of a municipal corporation could go missing across multiple bank accounts without triggering internal audit flags or regulatory detection remains unanswered.
For Indian banking regulators including the Reserve Bank of India, the Haryana bank fraud case raises systemic questions about the adequacy of internal controls at private sector banks handling public body deposits, questions that will need to be addressed regardless of how the specific criminal investigation concludes.
This article updates Business Upturn’s earlier reporting on the Haryana bank branch closures. Information on branch reopening and the ₹120 crore payment is sourced from Dainik Jagran and financial market sources as of March 30, 2026. The investigation is ongoing and all fraud allegations remain sub judice. This article is for informational purposes only.