In a major victory for the Karnataka government, the State Bank of India (SBI) and Punjab National Bank (PNB) have repaid ₹22.67 crore of embezzled money, along with a year’s interest, according to sources in the State Secretariat.
Following repayment of the amount, the government has decided to withdraw its earlier circular, severing ties with both banks, sources said.
What the circular said
In the circular dated August 12, the Karnataka government had asked all the State departments, boards/corporations, universities, local bodies, and public sector undertakings to sever relations with both ba ks. This followed SBI and PNB not cooperating with the government in recovering ₹22 crore that was embezzled. However, following the requests by banks, on August 16, the Karnataka government decided to keep the circular in abeyance for 15 days.
Sources on Wednesday said that SBI had paid back ₹9.67 crore, and PNB had returned ₹13 crore, along with one year’s interest, subject to the outcome of the court cases. The Finance Department has decided to continue to pursue the banks for recovery of interest, sources said.
The government had held talks with both banks following the alleged fraud in the bank branches, which resulted in non-repayment of fixed deposits made by the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB). The issues have remained unresolved since 2012-2013.
Cases cited
As cited in the August 12 circular, KIADB had kept ₹25 crore in PNB, Rajajinagar branch, as a Fixed Deposit(FD) in September 2011. While one FD of ₹13 crore had been encashed, another FD of ₹12 crore had not been returned to the government, citing irregularities committed by the bank officials.
The other instance cited related to SBI, Avenue Road branch, in which the FD of ₹10 crore opened in August 2013 had been diluted by bank officials before the completion of the term. Based on forged documents, the money had been adjusted with a loan account of a private company. The case is also in court after multiple meetings and communications with the bank failed, the circular noted.
Published - September 04, 2024 11:07 pm IST
