Karnataka Government's Move to Cut Ties with National Banks Sparks Controversy

BJP Rajya Sabha member Lahar Singh Siroya criticized the Karnataka government's decision to close accounts with SBI and PNB, citing a suspicious Rs 187 crore scam. The state's directive affects numerous departments and institutions, raising concerns about adherence to RBI guidelines and the rationale behind targeting specific banks.

The Karnataka government’s decision to cease business with State Bank of India and Punjab National Bank has come under fierce criticism from BJP Member of Parliament Lahar Singh Siroya. On Friday, he labeled the move as 'arbitrary and suspicious' given the backdrop of a Rs 187 crore scam involving a state-owned corporation and the Union Bank of India.

Siroya questioned why the two nationalized banks were singled out, noting that all banks operate under the guidelines of the Reserve Bank of India. He cited media reports that instructed departments to close accounts and withdraw deposits from SBI and PNB, disallowing further investments.

The directive, enacted on August 12 and reported on August 14, affects various state departments, boards, corporations, public sector units, and universities. The BJP MP highlighted concerns related to the scam involving the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (KMVSTDC). He called for an investigation into whether the state government sought RBI’s opinion and questioned the underlying reasons for such a unilateral decision.