Karnataka govt order prohibiting dealings with SBI, PNB put on hold - Details

Karnataka govt puts circular prohibiting all dealings with SBI , PNB on hold for 15 days. Earlier, 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.

The government also directed the government institutions to close their accounts in these two banks and 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.

Karnataka Government vs SBI, PNB: What's the matter?

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, 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, the circular said. The finance secretary P C Jaffer (budget and resource) said in the circular that the Auditor General too had objected to it.

A state government circular on August 12 said the meeting with the bank officials did not yield any result and the matter is now sub judice.

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.

However, SBI in Dialogue with state govt. officials for amicable resolution to Karnataka state government order.

"As the matter is currently subjudice, 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", bank said in the statement.