The Punjab Nationwide Financial institution on Thursday issued an announcement after the Karnataka authorities determined to chop ties with the State Financial institution of India and PNB and requested all state authorities departments, public sector models to shut all accounts with these banks.
On August 15, the PNB stated it’s in dialogue with the Authorities of Karnataka to resolve the problem. “Because the matter is at present Sub-Judice, it is not going to be prudent to make any particular remark. Nevertheless, the Financial institution is dedicated for amicable decision of the matter and is in dialogue with Authorities of Karnataka,” PNB stated in an announcement.
On Monday, the finance division of Karnataka issued the order mandating the closure of all accounts held by state authorities departments, public sector models, boards, companies, native our bodies, universities, and different establishments at these banks. The round, as communicated by Secretary P C Jaffer, outlined a deadline of September 20 for the aforementioned entities to stick to this directive.
“On this background, it’s knowledgeable by means of this round that the state authorities’s departments, public sector models, companies, boards, native our bodies and universities and different establishments ought to withdraw all of the deposits/investments made in all of the branches of the State Financial institution of India and the Punjab Nationwide Financial institution and no deposits/investments ought to be made in future,” the round learn.
Primarily based on current reviews, the choice to take motion was influenced by two situations of fraudulent transactions that occurred on the banks. The primary incident occurred at PNB’s Rajajinagar department, the place the Karnataka Industrial Space Growth Board initiated a set deposit of Rs 25 crore on September 14, 2011. Upon the maturity of the deposit, it got here to mild that PNB solely disbursed Rs 13 crore, holding again the remaining quantity.
Regardless of quite a few efforts together with conferences and steady correspondence with financial institution officers, there was no decision to the problem as outlined within the official communication. Moreover, it was noticed that this specific case had been entangled in authorized proceedings for a interval of 10 years within the courtroom.
One other case is a few fastened deposit held on the former State Financial institution of Mysore, which underwent a merger with the SBI in 2017. Particularly, the Karnataka State Air pollution Management Board maintained a set deposit of Rs 10 crore on the financial institution’s Avenue Street department.
Allegedly, this quantity was utilised to offset loans acquired by a non-public entity by means of the submission of fraudulent paperwork. Upholding efforts to reclaim the sum reportedly encountered difficulties akin to these skilled within the dealing with of the fastened deposit state of affairs at PNB.
The problems talked about within the Comptroller and Auditor Common of India reviews drew vital objections. The Public Accounts Committee carried out a number of conferences to debate these issues and finally suggested that authorities stop all transactions with the banks in query, as outlined within the round.
An SBI official quoted in information reviews stated the order got here as a shock, as such a call was taken by the Karnataka authorities regardless of the matter being sub judice. He famous the quantity concerned within the matter is ‘small’, and the financial institution had confronted related situations earlier.
