Hyderabad: The confrontation between the Telangana government and the State Bank of India (SBI) over a five-acre land in Hyderabad threatens to dent the state’s image as an emerging investment destination, and further strain its finances, according to industry leaders, trade associations, and federations.
The land was allocated to the SBI in 2010 by the then interim Congress government in 2010 for the bank’s corporate headquarters in Raidurg, Hyderabad. But the SBI failed to build its headquarters, and the Telangana Industrial Infrastructure Corporation (TGIIC) auctioned the land on 1 June. It fetched Rs 204 crore per acre.
The SBI has moved court against this move. With India’s largest State-owned banker securing a stay from the Telangana High Court on the auction proceedings by the Telangana Industrial Infrastructure Corporation (TGIIC), a displeased state government has threatened to shift all its salary and government accounts out of SBI, according to government officials.
The Confederation of Indian Industries (CII), the Association of Chambers of Commerce (Assocham), and the Federation of Telangana Chambers of Commerce and Industry (FTCCI) have urged the government to resolve the dispute amicably, saying industry morale could be affected if the government uses strong-arm tactics
An Assocham official, who did not wish to speak on record, expressed apprehension that if not addressed amicably, the dispute could have wider implications, including on the Micro, Small and Medium Enterprises (MSME) sector.
“A drastic decision on (part of) the state government reviewing its association with the State Bank could have implications not just on the salary and welfare scheme transfers, but also on the thousands of MSMEs that are dependent on the banker’s financing for their capital and operational outflows. A credit disruption or transaction delay will not bode well for the state that is already under financial duress,” the official told ThePrint.
When contacted by ThePrint, a senior TGIIC official refused to comment, saying the matter was sub-judice. He, however, added that the state was being careful to ensure the matter does not balloon into a broader administrative conflict.
Congress leader and Chief Minister A Revanth Reddy is expected to take up this matter with the Prime Minister and Finance Minister during his two-day visit to Delhi on Monday and Tuesday. Government officials also said that the Reserve Bank of India Governor could be informed on this issue.
The dispute
The core of the conflict revolves around the 5.09-acre parcel allotted to the State Bank of India in 2010 by then-interim chief minister, late K Rosaiah, for its corporate headquarters in (united) Andhra Pradesh. The land was allotted at a subsidised rate of Rs 2.5 crore per acre even as the market value was about Rs 30 crore per acre.
According to government officials, the SBI was sent at least two reminders—in 2019 and 2020—on its commitments, when the government explicitly stated that the land would be reallocated if the requests were not complied with.
On 1 June, the land was auctioned by the TGIIC under the state’s asset monetisation programme, and it fetched Rs 1,038.36 crore, translating to nearly Rs 204 crore per acre. According to other state government sources, the per-acre value is expected to be around Rs 240 crore.
While TGIIC officials have maintained that the land was auctioned because the SBI failed to construct its headquarters during the stipulated period, the SBI has cited state bifurcation, the bank’s merger with the State Bank of Hyderabad and other entities, and the Covid-19 pandemic for delays in executing its plans.
In its defence, the SBI also produced all the details of the dispute before the Telangana HC, stating that Plot No. 1A, measuring 5.09 acres in Survey No. 83/1 at Hyderabad Knowledge City in Raidurg’s Panmaktha village, Serilingampally mandal of Rangareddy district, is still in its possession.
A legal notice to the state government is the second such incident in two years, after the state tried to sell 400 acres of the Hyderabad Central University in April 2025. A hue and cry raised over the overnight deployment of heavy earth-moving equipment led to the Supreme Court ordering the state to back down on any move to take possession of land.
In its petition to the court, the SBI stated that it operates 1,200 branches across Telangana and that nearly 80 percent of government employees maintain salary accounts with the bank.
Deposits and matching grants worth thousands of crores are handled by the SBI, with many accounts from the erstwhile SBH also merged into the parent bank. The Hyderabad State Bank, established in 1941, was the primary banker for the erstwhile Hyderabad State under the Nizam. After independence, the bank was made a subsidiary of the State Bank of India. About five SBI subsidiaries were brought under its aegis in 2017.
The confrontation between the state government and the banker puts a decades-old relationship at stake.
Sources said that SBI has also approached the State-level Bankers’ Association (SLBA) to represent its view to the state government. Industry bodies fear that the image of Telangana, which has risen to be among the most favoured investment destinations for its transparent land and industrial policies, could be dented if the state government acted in haste.
With SBI being the principal banker of the state, industry leaders in the real estate and manufacturing sectors have suggested a measured approach in resolving land issues in the state.
A CII official, who did not wish to be named, said, “The industry’s relationship with the state is already fractured because of the government wing HYDRAA (Hyderabad Disaster Response and Asset Protection Agency), its changing rules and regulations of industrial continuity.”
“We are living in an era of wars, sudden tariffs, pandemics, and disruptions in global supply chains. As business owners, we have to adapt constantly to the changing circumstances. If the vision of Atmanirbhar Bharat has to really take off, state governments cannot afford to be standoffish.”
What started as a civil issue involving the two parties has also escalated into a political issue with the Bharat Rashtra Samithi (BRS) and the Bharatiya Janata
Party (BJP) denouncing the Congress-run government’s actions of “arm-twisting” India’s largest banker over a small parcel of land. The Congress has alleged that the SBI’s combative approach has come at the behest of the BRS.
(Edited by Ajeet Tiwari)
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