MP Lahar Singh Siroya questions Karnataka Government’s decision to close accounts with SBI and PNB

Lahar Singh Siroya, Rajya Sabha MP (file photo)

Lahar Singh Siroya, Member of Parliament in the Rajya Sabha and a member of both the Standing Committee on Communications and Information Technology and the Consultative Committee on Home Affairs, has raised concerns over the Karnataka government's recent decision to close its accounts with the State Bank of India (SBI) and Punjab National Bank (PNB), while also halting any further deposits or investments in these banks.

In a press statement released on August 16, Siroya described the Karnataka government’s directive to close all departmental accounts with these two nationalized banks as "arbitrary and suspicious". "This move of the Kamataka government looks arbitrary and suspicious to me especially after the Maharshi Valmiki Scheduled Tribes Development Corporation scam came out, in which around Rs 187 crore was illegally transferred through a nationalised bank," Siroya said in his statement.

Karnataka government on August 12 ordered the closure of accounts from SBI and PNB. The decision reportedly stems from allegations of misappropriation of funds, he said. https://www.moneycontrol.com/news/business/karnataka-govt-orders-state-departments-to-close-accounts-in-sbi-pnb-12796983.html "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 state government order said.

Siroya questioned the legitimacy of the Karnataka government's unilateral action against these banks, highlighting that all nationalized banks are regulated by the Reserve Bank of India (RBI). He asked whether the state government had engaged with the RBI regarding its grievances and whether the "fraudulent transactions" charge held by the state government against the banks could be justified without a thorough probe. My simple question is, can a state government take such a unilateral decision against two nationalised banks? Are all banks not governed by the rules and regulations of the Reserve Bank of India (RBI)? If the state government has problems with the banks, should they not have reached out to the RBI? Can some nationalised banks be more acceptable and some less to the state government? What is the nature of misappropriation that the state government is talking about? Have they probed it? What really is happening within the Government of Karnataka?," Siroya questioned.

Siroya expressed concerns that the move might be an attempt by the Congress-led state government to undermine confidence in the banking system. He said, "I also wonder if the Congress-led state government is trying to deliberately create suspicion about our banking system through this action of theirs."

He urged Finance Minister Nirmala Sitharaman to investigate the situation and address any potential impact on the stability of the banking sector.

The Karnataka government is yet to respond to Siroya’s allegations and questions.

The diktat from the Karnataka government came amid an intense political tussle between the BJP-led Opposition and the Congress-ruled state government of Karnataka. State-run Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd is at the centre of an alleged fund transfer scam.