Business News Desk, The Karnataka government has decided to withdraw the circular ordering its departments not to do business with the State Bank of India (SBI) and Punjab National Bank (PNB). This decision has been taken after the two government banks paid the embezzled amount of Rs 22.67 crore along with one year’s interest. On August 12, the Finance Department of Karnataka had directed all the state departments, boards, corporations, universities, local bodies and government-owned companies to end their relationship with SBI and PNB. The government alleged that the banks were not cooperating in recovering the embezzled amount of Rs 22 crore. However, four days later the government suspended the circular.
“SBI returned Rs 9.67 crore and PNB returned Rs 13 crore, with interest for one year on both, which will remain in force till the outcome of the court cases,” an official said. The circular was related to two fraudulent transactions. The first case pertained to a fixed deposit of Rs 25 crore made by Karnataka Industrial Area Development Board in the Rajajinagar branch of PNB on September 14, 2011. Even after the deposit period expired, PNB allegedly released only Rs 13 crore, which remained unresolved in the last decade. The second case pertained to a fixed deposit of Rs 10 crore made by Karnataka State Pollution Control Board in the then State Bank of Mysore (which was merged with SBI) which was allegedly used to settle a loan of a private company using forged documents.
