BENGALURU: In what can be described as a first by any state government, Karnataka on Wednesday, August 14, took a drastic decision against public sector nationalised banks – State Bank of India and Punjab National Bank – and directed all its departments to close their accounts with these two banks.
The decision follows allegations of misuse of funds from government accounts, by bank officials.
Under fire for an alleged money transfer scheme in another matter, the Karnataka government’s finance department directed all state departments to close their accounts with these two nationalised banks and recover their deposits immediately. These deposits are said to run into a few lakh crores of rupees.
“Accounts held in the State Bank of India and Punjab National Bank by state government departments, public enterprises, corporations, local bodies, universities, and other institutions must be terminated forthwith. Additionally, no further deposits or investments are to be made in these banks,” the Finance Department order said.
Money transfer case
This order, coming in the backdrop of a political mudslinging over an alleged money transfer scam involving state-run Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd, is being seen as an extension of state versus centre tussle over a host of issues.
But the Valmiki scam, as it’s known, came to light after the suicide of the Corporation’s accounts superintendent, Chandrashekhar P, who left a suicide note behind, in which he alleged that Rs187 crore belonging to the corporation was transferred without authorization and Rs88.62 crore out of the total amount was then moved to other accounts, including those belonging to IT companies and a cooperative bank based in Hyderabad.
The Finance Department, in its Wednesday order, referred to alleged fraud involving funds of the Karnataka Industrial Area Development Board. Money belonging to the Board is alleged to have been siphoned off with the involvement of bank officials from accounts in the Punjab National Bank.
The Karnataka government claims that a case on this has been pending in courts and several crores of rupees have still not been refunded.
More allegations
Likewise, the Karnataka State Pollution Control Board had deposited money with SBI bank, which was allegedly adjusted along with a loan for a private company using forged documents in 2013. This case is also pending in court.
The state finance department has directed all the government entities that the process of closing accounts with both the banks and withdrawing funds must be completed by September 20. A compliance report must be filed with the Deputy Secretary of the Finance Department, the order said.
The banks were given prior warnings and communications regarding the allegations. However, since the issues remained unresolved, the state government took this drastic step, perhaps for the first time in history any state government has tried to “penalize” a nationalised bank thus.
The finance department order, issued by the Finance Secretary, has the approval of Chief Minister S Siddaramaiah.
All the state government entities have also been directed that no further deposits or investments should be made in these banks.
Main Image by Pete Linforth from Pixabay has been used for illustrative purposes only
