Finance Minister Nirmala Sitharaman on Friday accused the Congress-led UPA government of using banks and financial institutions as "personal entities", alleging that political interference led to loans being extended to influential business groups in violation of prudent lending norms.
Responding to Congress leader Rahul Gandhi's criticism of the proposed IDBI Bank divestment, Sitharaman cited several instances of alleged political interference in banking during Congress rule, including the removal of State Bank of India (SBI) chairman R K Talwar in 1976 during Indira Gandhi's tenure.
She claimed Talwar was removed after refusing to relax lending norms for a company linked to Sanjay Gandhi.
In a post on X, the Finance Minister alleged that IDBI Bank was forced to extend loans to large business groups with links to Congress leaders, including Videocon, Winsome, ABG Shipyard and Kingfisher.
These loans subsequently turned into non-performing assets (NPAs), causing significant losses to the bank, she said.
Sitharaman said the Narendra Modi-led NDA government had revived the bank through professional management, prudent lending practices and recapitalisation of more than Rs 25,000 crore. She maintained that all due procedures had been followed in the proposed strategic disinvestment.
Taking a swipe at Rahul Gandhi, she also referred to his allegations over the Rafale deal, saying they had been exposed and that 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," Sitharaman said, adding that ordinary citizens now had easier access to loans and bank employees were no longer under pressure to sanction loans through political recommendations.
Earlier, Rahul Gandhi had expressed solidarity with IDBI Bank employees and questioned the Centre's decision to sell its stake to Canada's Fairfax Financial Holdings.
In a letter addressed to IDBI Bank employees, Gandhi recalled meeting a group of bank staff at Parliament House in March last year, who questioned why the government was selling a bank they had helped make profitable.
He said he had raised the issue in the Lok Sabha, seeking an explanation for the proposed sale and assurances on the protection of employees and depositors, but the government had failed to provide satisfactory answers.
"Public banks are not assets to be sold off; they are tools to build the nation," Gandhi said, reiterating his opposition to the disinvestment.
On October 14, the government approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for around Rs 53,000 crore ($5.5 billion), marking a major step in India's long-delayed banking privatisation drive.
The proposed transaction involves the government's 30.48 per cent stake, valued at around Rs 26,620 crore, and LIC's 30.24 per cent holding, worth approximately Rs 26,440 crore.
The deal, which would mark one of the largest foreign investments in an Indian bank, is expected to be completed by the end of the current financial year, subject to regulatory clearances, including approval from the Reserve Bank of India (RBI).
(With inputs from PTI)