MUMBAI, Feb 23 (Reuters) - Indian private lender IDFC First Bank delayed addressing suspected fraudulent activity in government accounts, the chief minister of the northern state of Haryana said on Monday, even as the bank said it would make "necessary payments" to the state.

The bank disclosed on Saturday suspected fraudulent transactions totaling 5.9 billion rupees ($65 million) in accounts linked to the Haryana state government, which led to the suspension of four employees and a forensic audit by KPMG. Shares of the bank plunged on Monday.

Haryana Chief Minister Nayab Singh Saini told the state legislative assembly the discrepancies were first detected in January, according to a statement.

The government instructed the bank to close the accounts and transfer the funds along with interest to another lender, but IDFC First did not do so, Saini said.

The instructions were issued again at the end of January, after which "more serious" discrepancies were detected in February, when inconsistencies were found between the documents provided by the bank and government records, Saini said.

The bank accounts saw multiple transactions without state approval over the past three months, the minister said, without providing exact details on the number of accounts or the quantum of funds moved.

On February 18, the state finance department ordered the closure of all accounts held with IDFC First Bank, according to the statement.

Haryana has referred the matter to the State Vigilance & Anti-Corruption Bureau for investigation, Saini said.

"The Bank will make necessary payments as applicable to the Departments of Government of Haryana. Together with the support of (the) Government of Haryana and the Law Enforcement Agencies, we will bring the perpetrators to Book," a spokesperson for IDFC First Bank said in response to Reuters queries.

Another lender, AU Small Finance Bank, has also been dropped from the list of banks that operate Haryana government accounts, the government said, without giving a reason.

AU Small Finance has acknowledged the receipt of queries from the state government but has ruled out fraud.

Am email to AU Small Finance Bank seeking responses to the state's comments went unanswered.

(Reporting by Gopika Gopakumar in Mumbai & Manoj Kumar in Delhi; Editing by Mrigank Dhaniwala and Pooja Desai)

By Gopika Gopakumar and Manoj Kumar