Union Finance Minister Nirmala Sitharaman on Friday launched a scathing attack on Congress leader Rahul Gandhi over his opposition to the proposed sale of IDBI Bank, accusing successive Congress governments of turning public sector banks into instruments for favouring politically connected business groups.
Responding to Gandhi’s criticism of the Modi government’s decision to sell IDBI Bank to Canadian billionaire Prem Watsa’s Fairfax Financial Holdings, Sitharaman said the lender had been inherited by the NDA government in a financially distressed condition after years of politically influenced lending.
The war of words erupted after Gandhi questioned the rationale behind selling a bank that had returned to profitability. The Leader of Opposition also raised concerns over the future of bank employees, reservation policies and the government’s reduced stake following the proposed transaction.
Taking to X, Sitharaman alleged that Congress governments had repeatedly pressured banking officials to sanction loans to influential businessmen, often bypassing established lending norms.
Listing several historical controversies, she recalled the 1957 Haridas Mundhra-LIC scandal, alleging that political influence was used to secure funds from the insurance corporation. She also referred to the 1976 removal of State Bank of India Chairman R.K. Talwar after he allegedly resisted pressure to relax lending conditions for a company associated with Sanjay Gandhi’s circle.
The Finance Minister further cited alleged pressure exerted by Sanjay Gandhi on Central Bank of India over loans to Maruti, and accused former Congress minister B. Janardhana Poojary of pressuring bank employees to issue loans during the 1980s.
She also brought up former UPA minister Pawan Kumar Bansal, alleging that he had pressured Canara Bank to extend loans to businesses linked to his family.
Turning to IDBI Bank’s financial troubles, Sitharaman named Videocon, Winsome, ABG Shipyard and Kingfisher among the corporate borrowers whose loans eventually turned into bad debts, inflicting substantial losses on the lender.
“IDBI Bank was handed over to us in poor shape,” she said, adding that the Modi government had undertaken its revival through professional management, prudent lending practices and recapitalisation exceeding Rs 25,000 crore.
According to Sitharaman, the bank is now ready to enter its next phase of growth, with the proposed strategic restructuring following the prescribed procedures.
She also accused Gandhi of spreading misinformation about the transaction and referred him to the government’s February 2024 White Paper on the Indian economy, which documented alleged instances of economic mismanagement and irregularities during previous Congress-led governments.
Taking a swipe at the Congress leader, Sitharaman invoked his earlier controversy over allegations concerning the Rafale deal, saying his claims had been exposed and he had been forced to apologise.
“Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens. The era of ‘connection and setting banking’ is over,” she declared, arguing that ordinary citizens now have easier access to loans without political interference in lending decisions.
Gandhi had launched his attack on Thursday, arguing that the Congress had established IDBI to support India’s industrial development, whereas the Modi government was now choosing to sell it.
“During Congress’s time, banks were being created. During Modi’s time, they are being sold,” he said in a post on X, expressing solidarity with IDBI Bank employees.
In a separate letter addressed to the employees, Gandhi credited them with the bank’s turnaround and questioned the government’s decision to divest its stake despite the lender returning to profitability.
The latest confrontation comes just two days after Sitharaman and Gandhi clashed over the Tata Group. On Wednesday, the Finance Minister criticised the Congress leader for alleging that the conglomerate was being “criminally destroyed” under the Modi government.
Sitharaman accused Gandhi of repeatedly targeting Indian entrepreneurs and attempting to create distrust in the country’s business environment. She also reminded him of the Congress-era Licence-Quota Raj, which she said had stifled entrepreneurship and contributed to widespread poverty.
