In a stunning turn of events, the Karnataka government has taken the extraordinary step of halting all transactions with two major Central government-owned banks, the State Bank of India (SBI) and Punjab National Bank (PNB). This decision comes in response to serious allegations of funds misuse from government accounts, which have sent shockwaves through the state’s financial and political circles.
Finance Department’s Directive
The Karnataka government’s Finance Department has issued a clear directive to all state departments, public enterprises, corporations, local bodies, universities, and other institutions to immediately close their accounts with these banks. The directive also mandates the swift recovery of any deposits currently held in SBI and PNB accounts.
“All accounts held with the State Bank of India and Punjab National Bank by state government entities must be terminated forthwith,” the order stated. “Additionally, no further deposits or investments are to be made in these banks.”
Backdrop of a Political Scandal
This drastic action is closely tied to a brewing political scandal involving the Congress-ruled Karnataka government and the opposition BJP. The controversy centers around a major financial scam within the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd., a state-run entity.
The alleged scam came to light after the corporation’s accounts superintendent, Chandrashekhar P, tragically died by suicide on May 26, leaving behind a note that exposed the unauthorized transfer of ₹187 crore. Of this amount, ₹88.62 crore was further diverted to various accounts, including those belonging to IT companies and a Hyderabad-based cooperative bank.
Implications of the Decision
The Karnataka government’s decision to sever ties with SBI and PNB has far-reaching implications, not only for the state’s financial dealings but also for the political landscape. As the state braces for the fallout from this explosive scandal, the move signals the government’s intent to take a firm stance against financial malpractices, even if it means disrupting long-standing banking relationships.
