Bengaluru, Aug 15, 2024: In response to a series of alleged embezzlement incidents, the Karnataka government has suspended all financial dealings with two major public sector banks – State Bank of India (SBI) and Punjab National Bank (PNB). The suspension, which took effect immediately, was ordered on Wednesday following a directive from the state finance department, approved by Chief Minister Siddaramaiah.
The decision comes after multiple allegations surfaced regarding the misuse of government funds deposited in these banks. A circular issued by P.C. Jaffer, Secretary (Budget and Resources) of the Finance Department, instructed all government departments, state-owned enterprises, boards, and corporations to close any existing accounts with these banks and withdraw all deposited funds.
The finance department has also mandated that no further investments or deposits be made with SBI or PNB. All departments have been instructed to submit a compliance report detailing the closure of accounts and the withdrawal of deposits.
According to the circular, significant financial discrepancies have been identified in past transactions involving these banks. In one case, the Karnataka Industrial Area Development Board (KIADB) deposited ₹25 crore at PNB’s Rajajinagar branch in November 2012. Upon the maturity of the deposit, the bank returned only ₹13 crore, citing misappropriation of the remaining ₹12 crore by bank officials. Similarly, in 2013, the Karnataka State Pollution Control Board (KSPCB) deposited ₹10 crore with State Bank of Mysore at the Avenue Road branch, only for the funds to be allegedly diverted against a loan taken by a private company using fake documents.
Both cases are currently pending in court, raising concerns about the security of public funds in these institutions. The state’s decision to sever ties with these banks underscores its commitment to safeguarding public resources and ensuring financial accountability.
