Sitharaman Defends IDBI Bank Stake Sale

New Delhi Finance Minister Nirmala Sitharaman on Friday defended the government's decision to divest a majority stake in public sector IDBI Bank, accusing previous Congress-led governments of political interference in banking operations that contributed to the accumulation of non-performing assets (NPAs). Responding to criticism from Leader of the Opposition Rahul Gandhi over the proposed stake sale, Sitharaman alleged that Congress governments had treated banks and financial institutions as personal entities and pressured employees to extend loans without following prudent lending practices. In a post on X, the Finance Minister cited historical instances of alleged political interference, including the removal of former State Bank of India Chairman R.K. Talwar in 1976 after he reportedly refused pressure to relax lending conditions for a company linked to Sanjay Gandhi's circle. She also referred to alleged pressure on Central Bank of India regarding loans to Maruti. Sitharaman claimed IDBI Bank had been left in poor financial condition, citing loans extended to large business groups, including Videocon, Winsome, ABG Shipyard and Kingfisher, which subsequently turned into bad loans. She said the Narendra Modi-led NDA government had revived the lender through professional management, prudent practices and recapitalisation exceeding Rs 25,000 crore. According to the Finance Minister, IDBI Bank is now positioned for its next phase of growth following the government's intervention. She also maintained that all due procedures had been followed in the proposed strategic restructuring of the bank, adding that the government had already clarified its position. Defending the broader banking reforms, Sitharaman said ordinary citizens now had easier access to credit and bank employees were no longer under political pressure to sanction loans through influential connections.

"Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens." – Nirmala Sitharaman (Union Finance Minister). "The IDBI Bank was handed over to us in poor shape." – Nirmala Sitharaman (Union Finance Minister). "All due process has been followed in the IDBI Bank strategic restructuring." – Nirmala Sitharaman (Union Finance Minister).