The Karnataka government has suspended all transactions with the State Bank of India (SBI) and Punjab National Bank (PNB) amid allegations of fund misuse and illegal transactions. This directive, issued by the Finance Department, instructs all state departments to close their accounts with these banks and recover their deposits immediately. The decision follows reports of fraud, including a specific incident involving PNB's Rajajinagar branch, where the Karnataka State Industrial Board had fixed deposits of ₹25 crore but received only ₹13 crore upon maturity due to pending court cases. In response to the government's action, both SBI and PNB have stated they are in discussions with the Karnataka government to resolve the matter amicably. Following representations from the banks, the Karnataka government has paused its circular for 15 days, allowing time for negotiations. The situation remains dynamic as both banks seek to address the government's concerns and restore their business relationships.