Karnataka Directs Public Entities to Withdraw Deposits from SBI, PNB by September 20

The Karnataka government has instructed all its departments, boards, corporations, public sector units, and universities to withdraw their deposits and investments from the State Bank of India and Punjab National Bank. The government has also ordered a halt to any further business transactions with these institutions.

The order was issued by PC Jaffer who is the Secretary (Budget & Resources) of the Finance Department on 12 Aug with approval from Chief Minister Siddaramaiah. It sets a compliance deadline of September 20 for all concerned departments to withdraw their funds.

This directive follows a series of unresolved issues between the state government and the banks, particularly concerning the Karnataka Industrial Area Development Board (KIADB) and the Karnataka State Pollution Control Board. The KIADB was denied the redemption of ₹12 crore, while the KSPCB faced a similar issue with ₹10 crore—both cases reportedly involving scams by bank employees.

Despite meetings with bank officials, the matter remains unresolved and is currently under judice. The Auditor General has also raised objections to these incidents. The government has taken a decisive step to protect its interests.

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The circular mandates that all state government entities must withdraw their deposits from SBI and PNB, close their accounts, and submit certified closure reports. Detailed reports of deposits and investments must be sent to the finance department by September 20, 2024.

This move underscores the Karnataka government’s firm stance on safeguarding public funds and holding financial institutions accountable.