Nirmala Sitharaman Defends IDBI Bank Sale, Says Congress Treated Banks As 'Personal Entities'

Finance Minister Nirmala Sitharaman on Friday rejected Rahul Gandhi’s criticism of the proposed IDBI Bank sale, saying the government had followed due process and accused Congress governments of pressuring banks to lend to politically connected businesses.

“All due process has been followed in the IDBI Bank strategic restructuring, and we have already clarified this yesterday,” Sitharaman said in a post on X.

Gandhi had opposed the sale and expressed solidarity with IDBI employees. He said the bank was created to support industrial development, while the current government was selling public sector banks. “During Congress’s time, banks were being created. During Modi’s time, they are being sold,” he wrote.

Sitharaman Cites Past Lending Controversies

Sitharaman alleged that Congress governments had treated banks and financial institutions as “personal entities” and pressured employees to lend without following prudent norms. She cited several episodes, including the 1957 LIC investment in Haridas Mundhra’s companies and the 1976 removal of SBI chairman RK Talwar after he refused political pressure to relax lending conditions for a company linked to Sanjay Gandhi’s circle.

She also referred to loans from Central Bank of India to Maruti, and named former minister of state for finance B. Janardhana Poojary and former UPA minister Pawan Kumar Bansal in connection with Canara Bank.

Sitharaman said IDBI Bank had been handed over to the NDA government “in poor shape” after lending to large business groups with links to Congress leaders. She named Videocon, Winsome, ABG Shipyard and Kingfisher.

The NDA government, she said, revived the lender through professional management, prudent lending and recapitalisation of more than ₹25,000 crore. “The IDBI Bank is now poised for its next phase of growth,” she added.

Sitharaman also referred to Gandhi’s past remarks on the Rafale deal, saying: “Your lies with respect to Rafale had failed and were exposed. You had to apologise. The same will happen here.” She described Congress-era banking as “a phonebook for the powerful and a rulebook for the common citizens”.

Finance Ministry Defends Bidding Process

On Thursday, the finance ministry said the reserve price for the transaction had not been changed. It said the first bidding round became “functus officio” after the initial bids were not approved.

The ministry said the revised process increased the discovered bid price by ₹3,917 crore and capped the tax indemnity liability at ₹627 crore.

The Union Cabinet approved the sale of a 60.72% stake in IDBI Bank on October 14 for ₹52,878 crore to a subsidiary of Canada’s Fairfax Financial Holdings. The government and Life Insurance Corporation will retain 15% and 19% stakes, respectively.

Sitharaman has called the transaction a “strategic restructuring”, saying it should not be viewed as strategic disinvestment.

Gandhi Raises Employee Concerns; Strike Planned

In his message to IDBI Bank employees on October 29, Gandhi questioned the sale of a lender that had returned to profitability. He also raised concerns about employee protections, reservations and the government’s reduced stake.

IDBI Bank’s net profit rose 27% to ₹9,513 crore in 2025-26 from ₹7,515 crore in the previous year.

The United Forum of IDBI Officers and Employees has issued a strike notice opposing the proposed sale. Employees plan to hold a two-day nationwide hunger strike on November 2 and 3.

Separate Exchange Over Tata Group

The IDBI dispute follows another exchange between Gandhi and Sitharaman over the Tata Group. Gandhi had alleged that the group was being “criminally destroyed” and said business leaders were afraid to speak out.

Sitharaman accused him of politicising the issue and said it was unacceptable to label commercial and legal matters criminal without basis. She also questioned whether Gandhi was trying to encourage business leaders to join him in “spreading distrust and toxicity”.

"You have repeatedly decried the successes of Indian industry and our entrepreneurs. Now, are you trying to incite our business leaders to join you in spreading distrust and toxicity?" she said.