Karnataka suspends transactions with SBI and PNB over alleged funds misuse

PTC News Desk: The Karnataka government has issued an order stopping all transactions with the State Bank of India (SBI) and Punjab National Bank (PNB) in response to accusations of misusing money from government accounts. The Central government owns both of these banks.

All state departments have been instructed by the Karnataka government’s Finance Department to immediately terminate their accounts with these banks and retrieve their deposits.

“State government departments, public businesses, corporations, local bodies, universities, and other institutions holding accounts in the State Bank of India and Punjab National Bank must immediately close their accounts. Furthermore, no more investments or deposits are permitted in these banks,” the directive stated.

The ruling coincides with a political power struggle between the opposition BJP and the Congress-led Karnataka government over the purported money transfer scheme involving the state-owned Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd. Following the death of Chandrashekhar P., the corporation’s supervisor of accounting, committing suicide on May 26 and leaving a note behind, the alleged scheme came to light.

According to the note, ₹ 187 crore that belonged to the corporation was transferred without permission, and ₹ 88.62 crore of the total was thereafter transferred to accounts that belonged to cooperative banks in Hyderabad and IT companies. 

The Karnataka Industrial Area Development Board’s funds were purportedly fraudulently used, according to the state’s finance department’s reference in the order. Allegations have been made that funds from Punjab National Bank accounts were embezzled with the help of bank employees. The government said that numerous crores had still not been reimbursed and that the case is still pending in court. 

Similar to this, in 2013 the Karnataka State Pollution Control Board allegedly used fake documents to alter money it had placed with SBI bank and to secure a loan for a private company. There is a legal case regarding this as well. 

According to the directive, all departments were required to finish the process of withdrawing funds and canceling accounts with the banks by September 20.

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