Karnataka government suspends all dealings with SBI, PNB | Bengaluru News

BENGALURU: Close on the heels of back-to-back incidents of alleged embezzlement of public funds, Karnataka govt on Wednesday ordered suspension of all transactions with two public sector banks — State Bank of India (SBI) and Punjab National Bank (PNB) — with immediate effect.
Sources told TOI the finance department’s directive, approved by chief minister Siddaramaiah, came in the wake of multiple allegations of misuse of govt funds deposited with these two banks.In a circular issued to all govt departments, state-owned enterprises, boards, and corporations, the state finance department has directed closure of all accounts in these banks besides withdrawal of all deposits held with these entities.
The circular — issued by P C Jaffer, secretary (budget and resources), finance department, Karnataka — has further directed all govt entities not to deposit any funds in or make any further investments with these banks. The finance department has also ordered all departments to submit a compliance report to the state govt, along with details of closed accounts and withdrawal of deposits.

According to the circular, a copy of which is available with TOI, the Karnataka Industrial Area Development Board (KIADB) had deposited 25 crore at the Rajajinagar branch of PNB in November 2012. Following maturity of the deposit term, 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) had deposited 10 crore with State Bank of Mysore at the Avenue Road branch.
However, the bank officials claimed to have adjusted the deposit against a loan taken out by a private company based on fake documents. Subsequently, the bank refused to return the deposit. Cases involving the two banks are still pending before the courts.