Karnataka Government Pauses Directive to Close SBI and PNB Accounts Amid Ongoing Concerns

The Karnataka government has temporarily halted its directive to close all departmental accounts with State Bank of India (SBI) and Punjab National Bank (PNB) for 15 days.

This decision follows requests from both banks for additional time to address the government’s concerns.

On Friday, SBI and PNB formally asked for an extension to resolve the issues.

Senior bank officials met with the Finance Department to reiterate their need for more time.

In response, the Chief Minister instructed the Finance Department to pause the account closures, allowing the banks to address the concerns.

This move comes after an earlier directive on Wednesday, which had ordered the closure of accounts due to allegations of financial irregularities involving ₹187 crore.

The allegations include unauthorised transactions and mishandling of funds related to the Karnataka Industrial Area Development Board (KIADB) and the Karnataka State Pollution Control Board (KSPCB).

Specifically, KSPCB’s ₹10 crore fixed deposit with SBI in 2013 was reportedly misused, and KIADB’s ₹25 crore deposit with PNB in 2011 remains partially unaccounted for, with only ₹13 crore recovered.

The original deadline for compliance was set for September 20, 2024. However, the ongoing discussions with the banks have led to a temporary suspension of the directive.

The issue has also sparked a political row between the Congress-led Karnataka government and the opposition BJP over alleged fund misappropriations by the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd.

Both SBI and PNB have indicated that they are working with the Karnataka government to resolve the matter, amid ongoing legal proceedings.