On Wednesday, the Karnataka government issued a directive mandating all state departments, public sector units, boards, corporations, local bodies, and universities to immediately withdraw their deposits from the State Bank of India (SBI) and Punjab National Bank (PNB). The circular, dated August 12 and signed by PC Jaffer from the finance department, specifies that these entities must confirm the withdrawal by September 20.
The directive, approved by Chief Minister Siddaramaiah, follows two incidents involving these banks. The first issue concerns PNB’s Rajajinagar branch, where the Karnataka State Industrial Board’s fixed deposit of ₹25 crore was partially released, with only ₹13 crore returned due to pending court cases. The second issue involves the former State Bank of Mysore, now part of SBI, where ₹10 crore from the Karnataka State Pollution Control Board’s fixed deposit was allegedly used to settle a private company’s loan based on forged documents.
An anonymous SBI official expressed surprise at the government’s decision, noting that the matter is currently under judicial review and the sums involved are relatively minor compared to previous incidents. The circular mandates that no future deposits or investments be made with these banks.