Karnataka Govt to end association with SBI and PNB over fixed deposit ‘frauds’

According to the government, the decision followed two fraudulent transactions reported at these banks. The first is related to PNB’s Rajajinagar branch, where the Karnataka Industrial Area Development Board had started a fixed deposit of Rs 25 crore on September 14, 2011. However, after the term of the deposit ended, PNB allegedly released only Rs 13 crore. Meetings and repeated communication with bank officials did not yield fruit, the circular said, adding that the case had been heard by a court for the last 10 years.

The other case was related to a fixed deposit at the erstwhile State Bank of Mysore, which merged with the SBI in 2017. The Karnataka State Pollution Control Board had a fixed deposit of Rs 10 crore at the bank’s Avenue Road branch. According to the Government, the amount was adjusted to the loans taken by a private company using forged documents. Attempts to recover the amount are said to have suffered the same fate as that of the fixed deposit in PNB.

These issues attracted severe objections in the Comptroller and Auditor General of India reports. The Public Accounts Committee held multiple meetings over the issues and recommended that the authorities stop transactions with these banks, the circular added.