Karnataka Government Directs Withdrawal of State Funds from SBI, PNB
In an unprecedented move, the Karnataka government has issued a directive to all its entities to cease operations with the State Bank of India (SBI) and Punjab National Bank (PNB). This sweeping order affects departments, boards, corporations, public sector units, and universities across the state.
The decision stems from unresolved disputes involving substantial deposits made by two state bodies. The Karnataka Industrial Area Development Board (KIADB) and Karnataka State Pollution Control Board (KSPCB) have been unable to reclaim deposits of Rs 12 crore and Rs 10 crore respectively, due to alleged scams involving bank employees.
Finance Secretary P C Jaffer’s circular, dated August 12, revealed that negotiations with bank officials reached an impasse, pushing the matter into legal territory. The Auditor General has also raised objections to the situation.
The government has set a deadline of September 20, 2024, for all state institutions to withdraw their investments, close their accounts, and submit certified closure reports to the finance department. This drastic step aims to safeguard state funds and send a strong message to the banking sector.
