Sitharaman hits back at Rahul Gandhi over IDBI Bank privatisation, cites Congress-era loan pressure

The political clash between the Centre and the Congress over the proposed privatisation of IDBI Bank has sharpened. Leader of the Opposition Rahul Gandhi had raised some questions on the privatisation. Union Finance Minister Nirmala Sitharaman has responded strongly.

Ms Sitharaman replied in a social media post. She alleged that during Congress rule, banks lent under political pressure. She also said IDBI Bank suffered financial losses because some loans given to large business groups turned bad.

According to Ms Sitharaman, Congress governments used banks and financial institutions as if they were their own. She alleged that lending norms were set aside and bank employees were pressured to lend to particular individuals or companies.

In support of her claim, she cited some old incidents. She said that in 1957, in the Haridas Mundhra case, money was obtained from the Life Insurance Corporation of India (LIC) because of the influence of Congress leaders. She alleged that in 1976 R.K. Talwar, then chairman of the State Bank of India, was removed from his post because he refused to accept political pressure. She said the pressure was meant to ease the terms of a loan to a company linked to Sanjay Gandhi.

Ms Sitharaman also said pressure was put on the Central Bank of India over lending to Maruti. She said that in the 1980s, the then Minister of State for Finance B. Janardhana Poojary pressured bank employees to lend. She also alleged that during the UPA government, Pawan Kumar Bansal pressured Canara Bank so that businesses linked to his family would get loans.

Speaking about IDBI Bank, she pointed to its earlier financial condition. According to her, the bank was forced to lend to large business groups such as Videocon, Winsome, ABG Shipyard and Kingfisher. She said some of these loans became non-performing assets (NPAs) and the bank had to bear heavy losses.

According to Ms Sitharaman, the government led by Narendra Modi revived the bank through a professional approach, financial discipline and improved management. She said capital support of more than Rs 25,000 crore was provided for this. She also said the bank is now ready for the next phase of growth. She claimed that all required procedures were followed in the bank's strategic restructuring.

Replying directly to Mr Gandhi, Ms Sitharaman referred to the Rafale case. She claimed his allegations in that case proved wrong, and said his allegations on IDBI Bank would not stand either.

She criticised banking during the Congress years, saying influential people got preference while ordinary citizens had to stay within the rules. She also claimed that under the Modi government the lending process became more transparent and political pressure on bank employees eased.

The proposed privatisation of IDBI Bank has set off a discussion on government ownership in the banking sector, financial efficiency and the interests of ordinary customers. The government is presenting the case as one of reviving the bank, while the Opposition is questioning the decision to privatise. Ms Sitharaman's latest remarks are likely to sharpen the dispute further. Political circles are watching what the government says next about the privatisation process and how the Opposition responds.