Karnataka Government Halts Business with SBI and PNB Amid Bank Scandals

The Karnataka government has mandated that all its departments and institutions withdraw their deposits and investments from the State Bank of India and Punjab National Bank. This order follows the banks' failure to return funds due to scams involving their employees. The matter is currently under judicial review.

The Karnataka government has mandated an immediate withdrawal of all deposits and investments from the State Bank of India and Punjab National Bank by all state departments, boards, corporations, public sector units, and universities.

This directive follows a failure by the banks to redeem Rs 12 crore deposited by the Karnataka Industrial Area Development Board (KIADB) and Rs 10 crore by the Karnataka State Pollution Control Board (KSPCB), due to scams involving bank employees.

A circular from Finance Secretary P C Jaffer highlighted that meetings with bank officials were unproductive, and the issue is now legally challenged. All government institutions have been instructed to close accounts in the two banks and submit reports by September 20, 2024.

(With inputs from agencies.)