The Karnataka government has issued an order directing all state government departments, including public sector units, boards, corporations, local bodies, and universities, to immediately withdraw deposits from State Bank of India (SBI) and Punjab National Bank (PNB) and to close all their accounts with these lenders. The circular stated that these entities need to send confirmation of the same on or before September 20 to the government.
The circular, dated August 12, was signed by P C Jaffer, secretary in the finance department, citing two separate incidents involving these public sector banks as the reason for the action. The order has the approval of Chief Minister Siddaramaiah, who is also the state’s finance minister.
One incident involved PNB’s Rajajinagar branch, where the Karnataka State Industrial Board had fixed deposits of Rs 25 crore, but PNB released only Rs 13 crore on maturity, citing pending court cases.
The other case related to the erstwhile State Bank of Mysore (which was merged with SBI in 2017), where the Karnataka State Pollution Control Board had a fixed deposit of Rs 10 crore. The state government alleged that before the maturity of the deposit, the funds were adjusted against loans taken by a private company based on forged documents.
An SBI official, who wished to remain anonymous, said the order came as a surprise, as such a decision was taken by the Karnataka government despite the matter being sub judice. They also noted that the amount involved in the matter is ‘small’, only Rs 10 crore, and the bank had faced similar instances earlier.
First Published: Aug 14 2024 | 8:57 PM IST
