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Bank of India interested to take over govt business from SBI in Karnataka


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In a significant move, Bank of India is stepping up its efforts to attract deposits in Karnataka. This comes after the state government announced it would close all its accounts with State Bank of India (SBI) and Punjab National Bank (PNB) due to allegations of misappropriation of funds. Earlier, Canara Bank also devised plans to take over government business in Karnataka from SBI and PNB.

Bank of India’s Strategic Push

Sources have revealed that Bank of India’s management has directed its branch heads in Karnataka to capitalize on this opportunity to boost deposit mobilization. The bank is keen to attract the funds that will be moving away from SBI and PNB.

Strong Performance in Deposits

Bank of India has shown impressive growth in its deposits. In the June quarter of this financial year, the bank’s domestic deposits surged by 9.91% to ₹6.48 lakh crore. Its overseas deposits also grew by 8.83%, reaching ₹1.17 lakh crore. Overall, the bank’s total deposits climbed to ₹7.65 lakh crore, up from ₹7.38 lakh crore in the previous quarter and ₹6.97 lakh crore a year ago.

Government’s Decision and Timeline

On August 12, the Karnataka government issued a directive for all state departments to close their accounts with SBI and PNB and recover their deposits. The government has set a deadline of September 20 for this transition. This decision was made following a scandal involving mismanagement of funds, which included the inability to redeem ₹12 crore deposited by the Karnataka Industrial Area Development Board (KIADB).

Temporary Hold on Closure

However, on August 16, the Karnataka government decided to pause the account closure process for 15 days. This was after SBI and PNB requested additional time to address the issues. Both banks met with senior finance department officials to discuss their request.

Canara Bank’s Strategy

Amid these developments, Canara Bank has reportedly developed a strategy to take advantage of the situation. The bank has assembled a team of top officials to ensure they capture the opportunity presented by the Karnataka government’s decision.

Conclusion

As the situation evolves, Bank of India and other banks are positioning themselves to benefit from the changes in Karnataka’s banking landscape. With the state government’s significant move to shift accounts, there’s an opportunity for banks like Bank of India and Canara Bank to expand their deposit base in the region.

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