Karnataka pauses for 15 days circular boycotting SBI, PNB

Bengaluru: The Karnataka government on Friday paused for 15 days the operation of its circular to sever ties with the State Bank of India (SBI) and the Punjab National Bank (PNB) after the two lenders sought time to resolve issues.

On August 12, the Finance Department issued a circular ending all transactions with the two banks accusing them of not cooperating with the government in recovering Rs 22 crore money that was embezzled.

This involves deposits made by the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka State Pollution Control Board (KSPCB).

“On August 16, both banks submitted written representations to the government requesting a 15-day period to resolve the matter. The same day, senior bank officials met with higher officials of the Finance Department and reiterated their request,” the government said in a statement.

Based on the banks’ request, Chief Minister Siddaramaiah directed finance officials to keep the circular in abeyance for 15 days. “This will allow the banks sufficient time to address the issues and redress the concerns of the government,” the statement said.

“The government is committed to ensuring transparency and accountability in all its dealings. We will continue to monitor the situation and take appropriate action to protect the interests of all stakeholders,” the statement added.

Earlier in the day, the Opposition BJP criticised the Congress government for its circular severing all ties with the two banks.

“It is now in the public domain that embezzlement of Rs 187 crore belonging to the Valmiki ST Development Corporation took place involving Union Bank of India accounts. If misappropriation is the criteria, why ban only SBI and PNB and not Union Bank?” Leader of the Opposition R Ashoka said.

Senior BJP Rajya Sabha member Lahar Singh Siroya also attacked the Congress government. “My simple question is, can a state government take such a unilateral decision against two nationalised banks? Are all banks not governed by the rules and regulations of the Reserve Bank of India (RBI)? If the state government has problems with the banks, should they not have reached out to the RBI?” he said.

“I also wonder if the Congress-led state government is trying to deliberately create suspicion about our banking system through this action of theirs,” Siroya added.