The State Bank of India and Punjab National Bank are in talks with the state government to reach an amicable resolution after the Karnataka government ordered closure of all accounts of the two banks, the state government, departments and other institutions.
“As the matter is currently under litigation, it would be imprudent to make any specific comment. However, the bank (PNB) is committed to an amicable resolution of the matter and is in discussions with the Karnataka government,” PNB said in a press release.
SBI also expressed a similar view, saying that as the matter is currently under litigation, it cannot make any specific comment at this stage, but will continue to hold discussions with the government to resolve the issue amicably.
Late on Wednesday, the Karnataka government announced that all state government departments, public undertakings, corporations, boards, local bodies, universities and other institutions must immediately withdraw their deposits and investments from these banks.
According to a notice issued by the government’s finance ministry, no fresh deposits or investments will be made in these banks due to the alleged misappropriation of funds.
According to the notice, talks with bank officials have not yielded any results and the matter is currently in court.
The ministries and agencies will complete closure of accounts in both banks and transfer the funds by September 20 and will inform the Deputy Chief Secretary once complete.
