State-owned lender Bank of India has jumped into the race to mobilise deposits in Karnataka after the state government decided to close all its accounts and stop doing business with the State Bank of India (SBI) and Punjab National Bank (PNB), sources have told Moneycontrol.
The bank’s management has told branch heads in Karnataka to grab the opportunity of deposit mobilisation, sources said.
In the June quarter of the current financial year, Bank of India’s domestic deposit grew 9.91 percent on-year to Rs 6.48 lakh crore. The overseas deposit grew 8.83 percent to Rs 1.17 lakh crore.
The bank’s total deposits at the end of the quarter stood at Rs 7.65 lakh crore against Rs 7.38 lakh crore in the previous quarter and Rs 6.97 lakh crore in the year-ago period.
An emailed query to the bank remained unanswered as the time of publishing this story.
On August 12, the Karnataka government ordered all departments to close their accounts in SBI and PNB. The circular directed all state departments to close accounts and recover deposits. No further deposits or investments would be allowed in these banks, the government said, alleging misappropriation of funds.
The government set a September 20 deadline for all departments to comply with the August circular issued by PC Jaffer, secretary (budget & resources), finance department. The circular has been approved by chief minister Siddaramaiah.
On August 16, the government decided to keep the circular in abeyance for 15 days after the two banks sought time to resolve the matter.
"On August 16, 2024, 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," the Karnataka government said in the new circular.
The first circular was issued after the government was not allowed to redeem Rs 12 crore deposited by the Karnataka Industrial Area Development Board (KIADB) following a scam involving bank employees.
On August 15, some media reports said Canara Bank had drawn up a strategy and assigned a team of top officials to make the most of the opportunity offered by the Karnataka government’s decision.
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