Karnataka Government Orders Ban on Transactions with SBI and PNB

Allegations of Misuse of Government Funds

This decision follows allegations made by P C Jaffer, the Finance Department Secretary of Karnataka, regarding the misuse of government funds deposited in these banks.

Despite multiple warnings issued to the banks, no substantial action was taken, prompting the government to enforce this strict measure.

Impact on Government Departments and Institutions

The order affects all Karnataka government departments, public enterprises, corporations, local bodies, universities, and other state-run institutions, many of which hold accounts in SBI and PNB.

Additionally, the Finance Secretary has mandated the closure of all Fixed Deposit (FD) accounts in these banks by September 9, 2024.

This action comes in response to recommendations by the Public Accounts Committee (PAC) related to the Valmiki Vikas Nigam scam and other financial irregularities dating back to 2011 and 2013.