Karnataka Govt Orders State Departments To Suspend Business With SBI, PNB Amid Funds Misuse Allegations

Further, the order instructed the local authorities to close their accounts with the lenders and retrieve their deposits from these accounts at an immediate basis

The Karnataka government on Wednesday issued an order barring all transactions with two public sector banks. The state government instructed all the departments to suspend all business with the State Bank of India (SBI) and Punjab National Bank (PNB).

The decision comes as allegations surfaced regarding the misuse of funds from government accounts in these banks, reported NDTV. Notably, both the lenders are owned by the Central government.

The state government’s Finance Department restricted the departments from conducting any further business with these banks. Further, the order instructed the local authorities to close their accounts with the lenders and retrieve their deposits from these accounts at an immediate basis.

The order read, “Accounts held in the State Bank of India and Punjab National Bank by state government departments, public enterprises, corporations, local bodies, universities, and other institutions must be terminated forthwith. Additionally, no further deposits or investments are to be made in these banks.”

Notably, the state government has been clashing recently with the Centre. Karnataka’s government, led by the Congress party, has been involved in an intense political battle with the opposition led by the Bharatiya Janata Party regarding allegations of a money transfer scam. The fraud reportedly involves the Karnataka Maharishi Valmiki Scheduled Tribes Development Corporation Ltd, operated by the state.

The claims were recently brought to light after the corporation’s accounts superintendent, Chandrashekhar P, died by suicide in the last week of May. The official left a note behind stating that funds were transferred from the corporation without any authorisation.

The note claimed that the corporation’s funds worth Rs 187 crore were taken out without approval and Rs 88.62 crore from the overall account was then shifted to other accounts. These included accounts belonging to IT firms and a cooperative bank located in Hyderabad.