SBI, PNB in talks with Karnataka govt on decision to close bank accounts

Karnataka CM Siddaramaiah

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26 Aug, 2025 12:21

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Taken aback by the surprising decision by the Karnataka government to stop all transactions with them, State Bank of India and Punjab National Bank on August 15 said they are both engaged with the state for an "amicable resolution" on the matter.

Providing their first official comments after the Karnataka government's order to all its departments to close their accounts in SBI and PNB, the state-owned banks issued separate statements, saying the matter at the root of the problem is subjudice.

"As the matter is currently subjudice, we are unable to provide any specific comments at this time. However, we remain in ongoing discussions with the Government of Karnataka to resolve the issue amicably," SBI said in a statement.

“This is with reference to a circular issued by Govt. of Karnataka Secretariat on 12.08.2024 regarding closing the accounts of the state Govt. Department and other Institutions with SBI and PNB. As the matter is currently Sub-Judice, it will not be prudent to make any specific comment. However, the Bank is committed for amicable resolution of the matter and is in discussion with Government of Karnataka,” PNB said in a separate statement.

The Karnataka government on August 14 ordered all departments to close their accounts in State Bank of India and PNB.

All state departments have been directed to close accounts and recover deposits, according to an order from the government. No further deposits or investments will be allowed in these banks. The decision has been taken over alleged misappropriation of funds.

The state government has set September 20 deadline for all departments to comply, according to a circular dated August 12 from PC Jaffer, secretary (budget & resources), finance department, which has been approved by CM Siddaramaiah.

"Accounts held in the State Bank of India and Punjab National Bank by state government departments, public enterprises, corporations, local bodies, universities, and other institutions must be terminated forthwith. Additionally, no further deposits or investments are to be made in these banks," the order had said.

(With PTI inputs)