“Connection banking is over”: Sitharaman defends IDBI sale
Finance Minister Nirmala Sitharaman has hit back at Leader of Opposition Rahul Gandhi over the IDBI Bank stake sale, saying the bank was handed to the NDA government in poor shape because of loans the Congress-era system forced it to make.
The exchange began when Gandhi criticised the government’s decision to sell a controlling stake in IDBI Bank to a subsidiary of Canada’s Fairfax Financial Holdings. In a post on X, he wrote that IDBI was established under Congress to build the nation’s industry, while under PM Modi, banks are being sold. He also backed protesting bank employees and, in a personal letter to IDBI staff, warned that privatisation would strip away institutional protections.
Sitharaman said IDBI had been forced to lend to large business groups with close connections to Congress leaders, naming Videocon, Winsome, ABG Shipyard and Kingfisher. These loans turned bad and caused huge losses, she said. She added that all due process has been followed in the restructuring and that the bank is now poised for its next phase of growth.
In her X post, she also named two Congress figures. She said B. Janardhana Poojary, a Minister of State for Finance under Indira Gandhi and Rajiv Gandhi, pressured bank employees to issue loans in the 1980s, and that Pawan Kumar Bansal, as a UPA minister, pressured Canara Bank to lend to his family-linked businesses. These are her allegations and haven’t been tested.
She credited Prime Minister Narendra Modi with reviving IDBI through professionalism, prudence and recapitalisation of more than Rs 25,000 crore. She also said the era of “connection and setting” banking is over, and that ordinary people now have easier access to loans while employees are no longer pressured by phone calls to lend.
The Union Cabinet approved the deal on October 14: Rs 52,878 crore (USD 5.56 billion) for a 60.72 per cent controlling stake in IDBI Bank.
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