Published Aug 16, 2024 | 10:37 PM ⚊ Updated Aug 16, 2024 | 10:37 PM
SBI and PNB banks (Wikimedia Commons)
The Karnataka government has put on hold its order directing state-run institutions and departments to sever all banking relations with the State Bank of India (SBI) and Punjab National Bank (PNB).
Siddaramaiah-led government decided to temporarily freeze its 12 August order after senior officials of both banks, on Friday, 16 August, sought 15 days to sort out the issues.
The earlier order had directed all departments, institutions, boards, corporations, and universities to withdraw all deposits and investments from the two public sector banks. The order cited fraudulent activities and failure to refund fixed deposits on maturity to the Karnataka State Pollution Control Board and Karnataka Industrial Area Development Board.
The government withheld its previous order after SBI’s Chief General Manager Vinod Jaiswal and PNB’s Divisional Manager Deepak Kumar Srivatsava submitted letters to the government, seeking 15 days to settle the accounts.
#Karnataka: @INCKarnataka Government Puts Hold on Circular Against SBI and PNB for 15 Days
In a significant development, the Karnataka government has temporarily suspended its circular directing state institutions including boards and corporations to close accounts and withdraw… pic.twitter.com/dQZMHHPKF7
— South First (@TheSouthfirst) August 16, 2024
The bank officials also held talks with the higher officials of the Finance Department, including Additional Chief Secretary (Finance) LK Atheeq, and assured them to return the fixed deposits.
The temporary suspension of the circular is seen as a relief for the banks, which have significant business interests in Karnataka.
The ‘fradulent’ activities
The Karnataka government ordered to snap banking relations with the SBI and PNB due to alleged fraudulent activities and failure to refund money despite court cases pending for over a decade.
“KIADB had paid ₹25 crore to PNB’s in Bengaluru’s Rajajinagar branch to invest in one-year fixed deposit on 14 September, 2021. The bank’s Sankari branch in Salem issued a fixed deposit receipt for ₹12 crore and another one for ₹13 crore. Once the fixed deposit matured, ₹13 crore was encashed,” the order said.
However, the bank did not refund the ₹12 crore due to an alleged fraud committed by its officials. Correspondence and meetings with the bank did not yield any result, and matter has been before the court for over 10 years.
Some SBI officials, it has been alleged, withdrew the KSPCB’s fixed deposit of ₹10 crore pre-maturely, and adjusted it against the dues of a private company by using forged documents.
In this case, too, the bank did not refund the deposit. A case in this regard has been pending before the court. The Comptroller and Auditor-General (CAG) raised serious objections in these cases pertaining to the two banks.
“As a result, all deposits and investments in SBI and PNB will be withdrawn immediately, and no further deposits or investments will be made. Additionally, all accounts in SBI and PNB will be closed, and details must be submitted to the Finance Department by September 20, 2024,” the state government directed in its earlier order.
(Edited by Majnu Babu).
