The Telangana government is planning to withdraw its funds and services from all branches of the State Bank of India (SBI) in the state due to ongoing dispute between the government and SBI over a high-value land auction in Raidurg’s Knowledge City.
According to sources, the government has started collecting details of all its deposits, accounts, and financial transactions maintained with SBI in Telangana. Officials are also examining whether government accounts and deposits can be shifted to other banks if required. Let’s understand this dispute
What is the Land Auction Dispute
The dispute relates to a 5.09-acre land parcel located in Raidurg Knowledge City.
The Telangana Government Industrial Infrastructure Corporation (TGIIC) auctioned the land on June 1. The auction generated a record revenue of ₹1,038.36 crore, with the land fetching nearly ₹204 crore per acre, making it one of the most expensive land deals in the region.
However, SBI challenged the auction in the High Court. The bank argued that it had purchased the land in 2010 for ₹13.33 crore and that the property was still under its possession.
Government’s Stand on the Matter
Government officials claim that SBI violated the conditions under which the land was originally allotted.
According to them, the land was provided to SBI at a concessional rate for constructing a corporate office and related facilities. One of the key conditions was that the development work had to be completed within two years.
Officials said SBI took possession of the land in January 2011 after signing the sale agreement but failed to carry out any significant construction work. As a result, the then Andhra Pradesh Industrial Infrastructure Corporation and later TGIIC issued several notices to the bank.
After granting multiple extensions, the government rejected SBI’s request for further extension in December 2020 and decided to reclaim the land.
TGIIC subsequently cancelled the land allotment on January 22, 2021. Officials stated that the corporation formally took back possession of the land through a panchanama on February 1, 2021.
The dispute is now before the High Court and the decision is yet to be announced.
It appears that the Telangana Government is trying to put pressure on SBI to vacate the land so that the government can generate substantial revenue from it.
Reports suggest that the government is considering shifting its banking business away from SBI as part of this strategy. However, the government should exercise caution while transferring its funds to any other bank.
Recently, more than ₹600 crore belonging to the Haryana Government was allegedly embezzled by employees of a private bank. This incident occurred after Haryana had shifted a portion of its government funds from SBI to private banks.
As India’s largest public sector bank, SBI has a long-standing record of handling government funds, and many believe that government deposits should continue to remain with SBI.
