The Karnataka government on Friday, August 16, kept its circular in abeyance for 15 days, which prohibited all business transactions with the State Bank of India (SBI) and the Punjab National Bank (PNB). The decision came after Chief Minister Siddaramaiah considered the two banks’ requests.
A government circular on August 12 ordered all its departments, boards, corporations, public sector units and universities to withdraw all their deposits and investments in the SBI and the PNB and stop transacting any business with these institutions.
"After considering the banks' requests, the Chief Minister has directed officials of the Finance Department to keep the circular in abeyance for 15 days," said the state government in its circular. "It said that putting the previous circular on hold "will allow the banks sufficient time to address the issues and redress the government's concerns."
‘’The government is committed to ensuring transparency and accountability in all its dealings. We will continue to monitor the situation and take appropriate action to protect the interests of all stakeholders," it added.
The state government said that based on the observations made by the Public Accounts Committee on July 2 and August 6 and the audit findings included in the Comptroller and Auditor General's report, the government decided to issue the circular on August 12, directing all departments to withdraw their deposits and restrict further deposits in all branches of SBI and PNB.
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The state government added that this action was taken in response to the alleged fraud in the bank branches, which resulted in the non-repayment of fixed deposits made by the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB).
The government said these issues remained unresolved despite prolonged correspondence and meetings since 2012-13. It added that on August 16 both banks submitted written representations to the government, requesting a 15-day period to resolve the matter.
The same day, senior bank officials met with higher officials of the Finance Department and reiterated their request. According to the previous circular, ₹12 crore belonging to the KIADB and ₹10 crore of the KSPCB were blocked by PNB and SBI for many years owing to scams in these two banks.
SBI reported an almost flat standalone net profit of ₹17,035 crore for the first quarter of the current fiscal year, growing one per cent compared to ₹16,884.2 crore in the corresponding period last year. The bank's total income increased to ₹1,22,688 crore in the first quarter up from ₹1,08,039 crore a year ago. On Friday, shares of SBI settled 1.18 per cent higher at ₹812.45 apiece on the BSE.
PNB reported a rise of 159 per cent in standalone net profit at ₹3,251.5 crore – its highest-ever quarterly profit in the June quarter, compared to ₹1,255.4 crore in the corresponding period last year. The substantial increase in net profit is attributed to robust performance across various financial metrics, driven mainly by a decline in bad loans and an improvement in interest income. Shares of PNB settled 0.44 per cent lower at ₹113.05 apiece on the BSE.
With inputs from PTI
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