The Karnataka government has temporarily suspended the implementation of a circular mandating withdrawal of deposits and restricting further deposits in all branches of Punjab National Bank (PNB) and State Bank of India (SBI), the state government said in a statement.
The state government has suspended the implementation of its circular for the next 15 days. On Saturday, the state government said that both banks had submitted written representations to the government on August 16, seeking additional time to resolve the matter.
“After considering the requests of the banks, the Hon’ble Chief Minister has directed the officials of the Finance Department to keep the circular in abeyance for 15 days. This will enable the banks to have sufficient time to address the issues and allay the concerns of the government,” read the statement issued by the Karnataka government.
The state government urged officials to ensure transparency and accountability in all dealings, the statement said.
The Karnataka government had directed all its powers to restrict deposits in all branches of both centrally-owned lenders.
The directive follows observations made by the Public Accounts Committee on July 2, 2024, and August 6, 2024, which indicated alleged fraud in branches of these banks.
According to the state government, the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB) had made fixed deposits which were not returned as a result of alleged fraud at bank branches. This prompted the state government to take action.
“Despite prolonged correspondence and meetings, these issues remain unresolved since 2012-13,” the Karnataka government said.
Going further, the state government added in the statement that ensuring transparency and accountability in all its relationships remains a priority.
“We will continue to monitor the situation and take appropriate measures to protect the interests of all stakeholders,” the statement added.
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