Sitharaman hits back at Rahul Gandhi over IDBI Bank deal, recalls Congress-era bad loans

New Delhi, Oct 30 (UNI) union Finance Minister Nirmala Sitharaman on Friday defended the Centre's proposed sale of a majority stake in IDBI Bank, hitting back at Congress leader Rahul Gandhi over his criticism of the disinvestment move.

She accused previous Congress-led governments of interfering in the functioning of public sector banks and influencing lending decisions, which, she alleged, contributed to the accumulation of bad loans. In a post on X, Sitharaman alleged that political pressure was frequently used during Congress rule to push banks into extending loans without adhering to established lending practices.

Citing historical instances, she referred to the removal of former State Bank of India (SBI) Chairman R.K. Talwar in 1976 after he allegedly resisted pressure to ease lending conditions for a company associated with Sanjay Gandhi. "In 1976, Indira Gandhi's government removed SBI Chairman R.K. Talwar after he refused political pressure to relax lending conditions for a company linked to Sanjay Gandhi's circle. Sanjay Gandhi pressured the Central Bank of India over loans to Maruti," FM Sitharaman wrote.

The Finance Minister also alleged that IDBI Bank had been pushed into extending large loans to corporate groups, including Videocon, Winsome, ABG Shipyard and Kingfisher, which subsequently turned into non-performing assets (NPAs), resulting in substantial losses for the lender. "The IDBI Bank was handed over to us in poor shape, as IDBI itself was forced to lend to large business groups such as Videocon, Winsome, ABG Shipyard and Kingfisher, etc with close connections to Congress leaders. These turned into bad loans, causing huge losses for IDBI Bank, which we recognised," the finance minister stated. Defending the Narendra Modi government's record, Sitharaman said IDBI Bank had undergone a turnaround through improved governance, prudent banking practices and recapitalisation exceeding Rs 25,000 crore. She maintained that the proposed strategic disinvestment was being undertaken after following the prescribed procedures.

Taking a swipe at the Congress, the Finance Minister said the earlier banking system favoured influential borrowers, while ordinary citizens faced greater difficulties in accessing credit. She also referred to the government's White Paper on the Indian Economy, released in February 2024, which documented alleged instances of financial mismanagement and banking-related irregularities under previous administrations.

The Centre on October 14 approved the proposed sale of a 60.72 per cent stake in IDBI Bank to Canada's Fairfax Financial Holdings for approximately Rs 53,000 crore. The transaction, if completed, would mark one of the largest foreign investments in India's banking sector. The proposed transaction is part of the government's strategic disinvestment plan and is expected to transfer management control of the lender to the successful buyer.

Rahul Gandhi had criticised the government's decision to sell a majority stake in IDBI Bank, questioning the Centre's approach towards public sector banking institutions. Expressing support for the bank's employees, the Congress leader said his party had established banks during its tenure, whereas the current government was selling them. He also expressed solidarity with IDBI Bank employees through a post on X, opposing the proposed stake sale.

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