In a bid to find an amicable solution to the recent account closures ordered by Karnataka, two of India’s largest public sector banks have initiated discussions with the state government.
Last week, the state finance department directed all its departments and agencies to shut accounts held with State Bank of India and Punjab National Bank by next month. This followed reports of alleged fraud linked to fixed deposit transactions involving these lenders.
In official statements issued yesterday, both SBI and PNB said they are committed towards an agreeable resolution of the matter. High-level negotiations are currently ongoing with Karnataka administration on this issue.
The state’s decision stemmed from two separate cases of suspected malpractice. One case relates to a Rs. 25 crore fixed deposit placed with PNB in 2011, where the full amount was not returned upon maturity. A decade-old Rs.10 crore deposit with a SBI branch also reportedly suffered losses allegedly due to forged documents used to adjust loans.
Attempts by the concerned bodies to recover the missing funds from the banks did not succeed, ultimately leading the state to sever ties with the lenders.
While the matter is pending further discussion, the banks have reiterated their resolve to find a settlement that is satisfactory to both parties. Talks are focused on adequately addressing the grievances through a fair process.
