Karnataka News— In a dramatic move, the Karnataka government has suspended all transactions with the State Bank of India (SBI) and Punjab National Bank (PNB) due to allegations of misuse of government funds deposited in these banks. The state’s Finance Department announced the decision on Wednesday, directing all state departments to close their accounts and immediately recover their deposits from these institutions.
Details of the Government Order
The order, approved by Chief Minister Siddaramaiah and issued by Finance Secretary Jaffer, requires the termination of accounts held by state government departments, public enterprises, corporations, local bodies, universities, and other institutions with the SBI and PNB. It also mandates the immediate return of all deposits. Furthermore, the order stipulates that no further deposits or investments are to be made in these banks.
Reasons Behind the Suspension
The directive comes after a probe revealed that nearly Rs 190 crore had been swindled from public bank accounts. Despite previous warnings and communications regarding the alleged misuse of funds, the issues remained unresolved, prompting this decisive action by the state government.
The Finance Department highlighted that the decision to suspend transactions with SBI and PNB represents a significant shift in the handling of state finances. This move underscores the government’s commitment to addressing financial misconduct and ensuring the integrity of public funds.
Impact and Next Steps
The suspension of transactions with these major banks is expected to have far-reaching implications for the state’s financial operations and its relationship with the banking sector. The state government has claimed that these top banks are also under scrutiny for their role in the alleged misuse of funds.
As part of the transition, the government is likely to explore alternative banking options to manage its finances effectively while maintaining transparency and accountability.
Response from the Banking Sector
As of now, the State Bank of India and Punjab National Bank have not issued any official statements in response to the Karnataka government’s decision. However, the banks are expected to cooperate with the authorities to resolve the issues and restore trust in their operations.
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