BENGALURU: The Karnataka government Friday decided to withhold suspension orders against two nationalised banks – SBI and PNB – and granted them 15 days to rectify issues related to misuse of government funds.
Finance department officials and representatives of the two banks met on Friday and officials told TOI the discussions were “fruitful”. Banks had requested a fortnight to set things right.A senior official said, “We are suspending the operation of the circular for 15 days in view of the assurances given by banks.”
Earlier this week, the government had issued an order instructing all departments to suspend banking operations with SBI and PNB due to scams that occurred in these institutions between 2011 and 2013. Sources say the decision sent a “strong message” to all banking institutions, emphasising the need for stringent checks and balances when handling state government funds.
The confrontation between the state government and SBI and PNB stemmed from Public Accounts Committee’s strong criticism of the finance department for not penalising the two banks for scams.
“Based on PAC’s strong recommendations, which embarrassed the finance department, we decided to withdraw all government funds from the two banks,” officials said.
Meanwhile, chief minister CM Siddaramaiah held a preparatory meeting to prepare for the 16th Finance Commission’s visit to Karnataka, scheduled for Aug 28 to 30. Finance department officials, revenue minister and Karnataka’s representative at the GST Council, Krishna Byre Gowda, and CM’s the chief minister’s economic advisor, Basavaraj Rayareddi, were in attendance.
Finance department officials and representatives of the two banks met on Friday and officials told TOI the discussions were “fruitful”. Banks had requested a fortnight to set things right.A senior official said, “We are suspending the operation of the circular for 15 days in view of the assurances given by banks.”
Earlier this week, the government had issued an order instructing all departments to suspend banking operations with SBI and PNB due to scams that occurred in these institutions between 2011 and 2013. Sources say the decision sent a “strong message” to all banking institutions, emphasising the need for stringent checks and balances when handling state government funds.
The confrontation between the state government and SBI and PNB stemmed from Public Accounts Committee’s strong criticism of the finance department for not penalising the two banks for scams.
“Based on PAC’s strong recommendations, which embarrassed the finance department, we decided to withdraw all government funds from the two banks,” officials said.
Meanwhile, chief minister CM Siddaramaiah held a preparatory meeting to prepare for the 16th Finance Commission’s visit to Karnataka, scheduled for Aug 28 to 30. Finance department officials, revenue minister and Karnataka’s representative at the GST Council, Krishna Byre Gowda, and CM’s the chief minister’s economic advisor, Basavaraj Rayareddi, were in attendance.
