IDBI Bank sale turns to BJP-Congress battleground

After sparring over the Tata tussle issue two days ago, Union Finance Minister Nirmala Sitharaman and Rahul Gandhi again slugged it out on Friday over the privatisation of the public sector Industrial Development Bank (IDBI).

With concerns expressed over its divestment and Rahul Gandhi wading into the issue, Nirmala Sitharaman hit back, alleging that the Congress party and the previous UPA regime used banks as “personal entities.” She also claimed the erstwhile Government pressured bank employees to extend loans at its whim, bypassing prudent lending norms.

The latest engagement came after Rahul Gandhi, in a letter to the IDBI employees on Thursday, expressed solidarity with them and questioned the Government’s decision to sell off the profitable public bank to a Canadian firm. The Leader of Opposition in the Lok Sabha asserted that public banks are not assets to be sold off, they are tools to build the nation. Sitharaman’s rebuttal followed on Friday.

The Government on October 14 approved the sale of a 60.72 per cent stake in IDBI Bank to Indian origin Prem Watsa-headed Canada’s Fairfax Financial Holdings for about Rs 53,000 crore ($ 5.5 billion), in what would be the largest foreign investment in an Indian bank and a major milestone in the country’s long-delayed banking privatisation drive.

Fairfax will be the strategic buyer of the Government’s 30.48 per cent stake, valued at about Rs 26,620 crore, and the 30.24 per cent stake held by LIC, valued at about Rs 26,440 crore.

The strategic transaction of IDBI Bank is expected to be completed by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India (RBI).

Sitharaman’s latest counterattack on social media cited several instances from the Congress-led government, including the removal of SBI Chairman R K Talwar in 1976 under Indira Gandhi’s rule after he allegedly refused to give in to political pressure to relax lending norms for a company linked to Sanjay Gandhi.

On the remarks made by Rahul Gandhi, Sitharaman said, “IDBI Bank was handed over to us in poor shape, as IDBI itself was forced to lend to large business groups with close connections to @INCIndia leaders such as Videocon, Winsome, ABG Shipyard, and Kingfisher.

“These turned into bad loans, causing huge losses for IDBI Bank, which we recognised,” she said.

“The NDA govt led by Hon’ble PM Shri @narendramodi revived the IDBI Bank through professionalism, prudence and recapitalisation of more than Rs 25,000 crores. The IDBI Bank is now poised for its next phase of growth,” the Finance Minister said. All due process has been followed in the IDBI Bank strategic restructuring, she added.

In a letter to members of the IDBI Bank family, Rahul Gandhi said in March last year that a group of IDBI Bank employees met him at Parliament House and asked a simple question: why the government is selling a bank they had made profitable.

“I took that question to the Lok Sabha. I asked why a profitable public bank was being sold and how its employees and depositors would be protected. The government gave no reason. Now it has decided to sell IDBI Bank to Fairfax, a Canadian company,” Gandhi said.

Taking a swipe at the Congress leader, Sitharaman said his allegations over the Rafale deal had earlier been exposed and that he had to apologise. “Your lies with respect to Rafale had failed and were exposed. You had to apologise. The same will happen here.”

Sitharaman further said, “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. Common people now have easy access to loans, and employees are not under pressure to extend loans over the phone calls,” the Minister said.

Noting that IDBI began as a pioneering development bank, Rahul Gandhi said the journey to a commercial bank has been difficult, but the employees have faced the challenges. An institution built with public money belongs to the public, he asserted.

Today, the government and LIC own 95 per cent of this bank. After the sale, they will own 34 per cent, he pointed out in the letter dated October 29.

In 2003, the government promised Parliament that it would always hold at least 50 per cent of IDBI, he said. “That promise may not be written into law, but a promise made to Parliament is a promise made to the people of India,” Gandhi asserted.

When IDBI is privately owned, reservation for SC, ST and OBC candidates will go with it, he said.

His remarks came a day after the Department of Investment and Public Asset Management (DIPAM) said the second round of bidding for strategic disinvestment of IDBI Bank was conducted under a procedure determined by the Core Group of Secretaries on Disinvestment (CGD), which was empowered by the Cabinet Committee on Economic Affairs (CCEA) to address procedural issues and deviations.

The initial round of bidding was conducted in the financial year 2025-26, but the bids were not approved, following which the first round became functus officio, or ceased to have further effect, the DIPAM said in a statement.

It added that the reserve price was neither reduced nor increased and the procedure for the second round, also referred to as the best offer round, was determined by the CGD.

The clarification follows questions raised by many, including the bank union, regarding IDBI Bank’s valuation and bid price by the proposed bidder Fairfax.