The Haryana Government on Wednesday de-empanelled Kotak Mahindra Bank in connection with the Rs 150 crore bank fraud involving Municipal Corporation (MC), Panchkula.Related news: Kotak Mahindra Bank’s Deputy VP arrested in Rs 150-crore Panchkula MC scamAdditional Chief Secretary Finance Arun Gupta intimated all administrative secretaries and head of departments that Kotak Mahindra Bank has been “de-empanelled for conducting Government business in the State of Haryana with immediate effect and until further orders.”Accordingly, no government funds shall henceforth be parked, deposited, invested, or transacted through the said bank, Gupta said.A communication from the Finance Department to all departments said, “All concerned are requested to take immediate action to transfer balances from accounts maintained with the said bank and to initiate closure of such accounts at the earliest. Compliance of these instructions may be ensured in letter and spirit.”Kotak Mahindra Bank has returned Rs 127 crore to the state government. However, this amount covers only the principal amount.The Vigilance and Anti-Corruption Bureau, Haryana, is currently investigating the alleged siphoning of funds from the accounts of MC, Panchkula, at Kotak Mahindra Bank branch in Sector 11, Panchkula.Branch manager Pushpender Singh and Relationship Manager Dileep Singh Raghav have already been arrested in the case.As per the FIR in the scam, the MC, Panchkula, was maintaining 16 FDs, amounting to Rs 145.03 crore, with a maturity value of Rs 158.02 crore, in the bank’s Sector 11 branch in Panchkula. Of the 16 FDs, 11, amounting to Rs 59.58 crore, matured on February 16. When the MC contacted the bank, officials provided statements that neither matched one another nor the MC’s records, particularly with respect to the FDs.Earlier, the state government had also de-empanelled IDFC First Bank and AU Small Finance Bank from government business following a Rs 590 crore scam.