The Karnataka government has ordered all state departments and state-run public sectors, local bodies and other institutions to close all their accounts with SBI and Punjab National Bank by September 20.
A circular dated August 12 issued by P.C. Jaffer, secretary of the state finance department, cited two long-standing disputes between the two central public sector banks and two government departments for the decision.
The first dispute is linked to PNB’s Rajajinagar branch in Bengaluru where the Karnataka Industrial Area Development Board (KIADB) had made a fixed deposit of ₹25 crore on September 14, 2011. The bank released only ₹13 crore even after the maturity of the deposit leading to a dispute with the government body, which has since been a matter of litigation after multiple meetings with the bank officials failed to yield any positive result.
In the second case, the Karnataka State Pollution Control Board had a fixed deposit of ₹10 crore with the Avenue Road branch in Bengaluru of the erstwhile State Bank of Mysore which merged with SBI in 2017. The bank didn’t release the money even after the maturity. It is also a matter of legal dispute.
However, the decision comes in the wake of an ongoing tussle between the Congress government and the Opposition BJP-Janata Dal Secular alliance over alleged financial embezzlement in the state government’s Maharishi Valmiki Scheduled Tribe Development Corporation.
