Why Is Karnataka Govt Angry With SBI, PNB and Saying ‘Withdraw All Deposits’

Karnataka PNB SBI News: The Karnataka government has ordered all its departments, boards, corporations, public sector units and universities to withdraw all their deposits and investments in the State Bank of India and the Punjab National Bank and stop transacting any business with these institutions.

Reasons Given By Karnataka Government

No further deposits or investments will be permitted in these banks due to allegations of fund misappropriation.

According to a circular dated August 12 from PC Jaffer, Secretary (Budget & Resources) of the Finance Department, and approved by Chief Minister Siddaramaiah, the state government has set a deadline of September 20 for all departments to comply.

The circular said the meeting with the bank officials yielded no result, and the matter is now sub judice.

The order came after the denial to redeem Rs 12 crore deposited by the Karnataka Industrial Area Development Board (KIADB) following a scam involving bank employees.

Similarly, the circular said that Rs 10 crore deposited by the Karnataka State Pollution Control Board (KSPCB) was not returned by the bank owing to a scam by the bank officials.

Jaffer said in the circular that the Auditor General too had objected to it.

“In this background, it is informed through this circular that the state government’s departments, public sector units, corporations, boards, local bodies and universities and other institutions should withdraw all the deposits/investments made in all the branches of the State Bank of India and the Punjab National Bank and no deposits/investments should be made in future,” the circular read.

The government also directed the government institutions to close their accounts in these two banks, submit the certified closer report, and send details of deposits and investment reports in the prescribed format to the finance department by September 20, 2024.

What Banks Said

SBI in a statement on August 15 said discussions are going on to resolve the issue amicably.

“As the matter is currently sub judice, we are unable to provide any specific comments at this time. However, we remain in ongoing discussions with the government of Karnataka to resolve the issue amicably,” SBI said in a press statement.

PNB also stated that it is dedicated to reaching an amicable resolution and is currently in discussions with the Karnataka government.