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Karnataka gives 15 days time to SBI and PNB to resolve issues


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In a recent development, the government has temporarily paused a circular that instructed all departments to withdraw their deposits from Punjab National Bank (PNB) and State Bank of India (SBI). This decision stems from concerns raised by the Public Accounts Committee and findings in the Comptroller and Auditor General’s report regarding alleged frauds in certain branches of these banks. The Karnataka Government has given 15 days time to SBI and PNB to resolve the issues.

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What Led to This Decision?

The issue began with the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB) facing significant difficulties in getting their fixed deposits returned by PNB and SBI. These problems have been ongoing since 2012-13, despite numerous efforts to resolve the matter through communication and meetings. The situation escalated to the point where the Public Accounts Committee, after reviewing the case on July 2 and August 6, 2024, recommended decisive action.

As a result, on August 12, 2024, the government issued a circular (FD-CAM/49/2024) directing all departments to withdraw their deposits from all PNB and SBI branches and to halt any further deposits. This move was a clear signal of the government’s intent to address the unresolved issues and protect public funds.

Banks’ Response and Government’s Reconsideration

On August 16, 2024, both PNB and SBI submitted formal requests to the government, asking for a 15-day period to resolve the matter. The same day, senior officials from both banks met with top officials from the Finance Department to reinforce their plea for more time.

After considering these requests, the Honorable Chief Minister decided to place the circular on hold for 15 days. This pause is intended to give the banks the opportunity to address the government’s concerns and resolve the issues related to the KSPCB and KIADB deposits.

What’s Next?

The government has made it clear that it remains committed to transparency and accountability. The situation will be closely monitored over the next 15 days. If the banks fail to resolve the issues within this period, the government may take further action to protect public funds and the interests of all stakeholders involved.

This decision underscores the government’s firm stance on ensuring that financial institutions operate with integrity and that public money is safeguarded at all costs.

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