Karnataka Government Closes Accounts with SBI and PNB

In a significant move, the Karnataka government has mandated all its departments, boards, corporations, public sector units, and universities to withdraw their deposits and investments from the State Bank of India (SBI) and Punjab National Bank (PNB). This directive follows a troubling incident involving the Karnataka Industrial Area Development Board (KIADB), which was unable to redeem Rs 12 crore due to a scam linked to bank employees. A government circular issued on August 12 indicated that discussions with bank officials were unproductive, and the issue is currently under judicial review. The circular also highlighted a similar situation with the Karnataka State Pollution Control Board (KSPCB), which faced difficulties retrieving Rs 10 crore due to the same scam involving bank personnel. The finance secretary, P C Jaffer, noted that the Auditor General had raised objections regarding these transactions, prompting the government to take decisive action. As part of the directive, all government institutions are required to close their accounts with SBI and PNB. They must also submit a certified closure report along with detailed accounts of their deposits and investments to the finance department by September 20, 2024. This sweeping measure underscores the government's commitment to safeguarding public funds and ensuring accountability within financial institutions. The decision reflects growing concerns over the integrity of banking operations in the state and aims to prevent further financial losses to government entities.