Sitharaman hits back at Rahul Gandhi over IDBI Bank stake sale, cites Congress-era bad loans

New Delhi, Oct 30 : 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 and accusing previous Congress-led governments of political interference in public sector banks.

In a post on X, Sitharaman alleged that political pressure during Congress rule influenced lending decisions and forced banks to extend loans without following established banking practices, contributing to the accumulation of non-performing assets (NPAs).

Citing historical instances, she recalled the removal of former State Bank of India (SBI) Chairman R K Talwar in 1976 after he allegedly resisted political pressure to relax lending conditions for a company linked to Sanjay Gandhi. She also alleged that Sanjay Gandhi had pressured the Central Bank of India over loans to Maruti.

The Finance Minister further claimed that IDBI Bank had been forced to extend large loans to corporate groups, including Videocon, Winsome, ABG Shipyard and Kingfisher, which later turned into bad loans and caused substantial losses to the lender.

"IDBI Bank was handed over to us in poor shape," Sitharaman said, alleging that these corporate groups had close connections with Congress leaders.

Defending the Narendra Modi government's record, she said IDBI Bank had undergone a significant turnaround through improved governance, prudent banking practices and recapitalisation exceeding Rs 25,000 crore.

She maintained that the proposed strategic disinvestment was being carried out in accordance with prescribed procedures. Taking a dig at the Congress, she said the earlier banking system favoured influential borrowers, while ordinary citizens faced difficulties in accessing credit.

Sitharaman also referred to the White Paper on the Indian Economy, released in February 2024, which highlighted alleged financial mismanagement and banking irregularities under previous governments.

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.

If completed, the transaction would rank among the largest foreign investments in India's banking sector and transfer management control of the lender to the successful buyer.

Rahul Gandhi had criticised the Centre's decision to sell a majority stake in IDBI Bank, questioning its approach towards public sector banking institutions. Expressing solidarity with the bank's employees, he said the Congress had established banks during its tenure, whereas the present government was selling them.

The Congress leader also conveyed his support to IDBI Bank employees through a post on X, opposing the proposed stake sale.