Karnataka Government Pauses Circular Against SBI And PNB For Two Weeks

The Karnataka government has decided to temporarily suspend its circular for 15 days, which had earlier barred all business transactions with the State Bank of India (SBI) and Punjab National Bank (PNB). The decision was made after Chief Minister Siddaramaiah reviewed requests from the two banks.

"Considering the banks' appeals, the Chief Minister has instructed the Finance Department to hold off on the circular for 15 days," stated the government.

The government emphasized its commitment to transparency and accountability in all its dealings and assured that it would continue to monitor the situation closely, taking necessary actions to safeguard the interests of all stakeholders.

Background on the Circular Issued to SBI, PNB

The state government explained that the circular, issued on August 12, was based on observations made by the Public Accounts Committee (PAC) on July 2 and August 6, along with audit findings from the Comptroller and Auditor General's report. The directive instructed all departments to withdraw their deposits and halt further deposits in all branches of SBI and PNB.

This action was taken in response to alleged fraud at the bank branches, leading to the non-repayment of fixed deposits by the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB), the government said.

Despite extensive correspondence and meetings, these issues have remained unresolved since 2012-13. On August 16, both banks submitted written requests to the government, asking for a 15-day period to resolve the matter. Senior bank officials also met with Finance Department officials the same day to reiterate their request. The previous circular noted that Rs 12 crore belonging to the KIADB and Rs 10 crore of the KSPCB had been blocked by PNB and SBI for several years due to scams within the banks.