NEW DELHI: Union Finance Minister Nirmala Sitharaman has defended the NDA government’s decision to divest its stake in IDBI Bank, accusing successive Congress-led governments of political interference in banking operations and financial mismanagement.
Her remarks came in response to criticism from Leader of Opposition Rahul Gandhi over the proposed sale of a controlling stake in the public sector lender to a subsidiary of Canada-based Fairfax Financial Holdings.
In a post on X, Sitharaman referred to controversies involving lending practices under previous Congress administrations, alleging that political influence had affected credit decisions and that public sector bank employees had faced pressure to approve loans without following established procedures.
The Finance Minister specifically named large business groups, including Videocon, Winsome, ABG Shipyard and Kingfisher, alleging that IDBI Bank had extended loans to companies with links to Congress leaders. According to her, several of these loans subsequently turned into non-performing assets, resulting in significant financial losses for the bank.
Sitharaman maintained that the current government inherited IDBI Bank in a weak financial condition and had to recognise the impact of past lending decisions. She used these allegations to defend the government’s approach to restructuring the lender and pursuing its strategic disinvestment.
The proposed transaction has drawn political attention, with Gandhi questioning the decision to transfer control of a public sector bank to a private investor. The disagreement has brought the management of state-owned financial institutions and the role of private investment in the banking sector into focus.
The government’s disinvestment strategy is aimed at reducing its ownership in selected public sector enterprises and bringing in private participation. However, the proposed IDBI Bank sale has triggered debate over the future of public sector banking, accountability for past financial losses and the potential consequences of transferring control to private investors.
The exchange between Sitharaman and Gandhi adds to the political contest over economic management, with both sides placing responsibility for banking sector decisions on different administrations.
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