Finance Minister Nirmala Sitharaman on Friday hit back at Leader of Opposition Rahul Gandhi over the proposed sale of IDBI Bank, accusing successive Congress governments of using public sector banks to extend loans to politically connected businesses and arguing that the Narendra Modi government had revived the lender through recapitalisation and professional management.
The exchange comes a day after Gandhi opposed the government's decision to sell IDBI Bank to Canadian company Fairfax and expressed support for the bank's employees. The Congress leader questioned the rationale for selling a lender that had returned to profitability, while raising concerns over employee protections, reservations and the government's reduced stake following the transaction.
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Responding to Gandhi's criticism in a post on X, Sitharaman said IDBI Bank had been handed over to the NDA government in poor condition after being forced to lend to large business groups with close links to Congress leaders.
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"IDBI Bank was handed over to us in poor shape," Sitharaman said, naming Videocon, Winsome, ABG Shipyard and Kingfisher among the companies whose loans had turned into bad debts and caused substantial losses to the lender.
We all know how @INCIndia has used Banks and financial institutions as personal entities and pressured bank employees to extend loans at their whim, bypassing prudent lending norms. Let me list a few instances. - In 1957, Haridas Mundra got money from LIC due to influence by the Congress leaders. - In 1976, Indira Gandhi's government removed SBI Chairman R.K. Talwar after he refused political pressure to relax lending conditions for a company linked to Sanjay Gandhi's circle. - Sanjay Gandhi pressured the Central Bank of India over loans to Maruti. - B. Janardhana Poojary, MoS Finance under Indira Gandhi and Rajiv Gandhi — pressured bank employees to issue loans in the 1980s. - Pawan Kumar Bansal, as a minister in the UPA, pressured Canara Bank to give loans to his family-linked businesses. The 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, Kingfisher, etc. These turned into bad loans, causing huge losses for IDBI Bank, which we recognised. 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. All due process has been followed in the IDBI Bank strategic restructuring, and we have already clarified this yesterday. Check this: https://t.co/EjAOziADyf Many more instances of blatant scams and economic mismanagement have been covered in the White Paper on the Indian Economy released in February 2024. It remains relevant even now. Read here: https://t.co/MojSe36Zb2 Your lies with respect to Rafale had failed and were exposed. You had to apologise. The same will happen here. 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.
— Nirmala Sitharaman (@nsitharaman) October 30, 2026
She said the NDA government had revived the bank through professional management, prudent lending practices and recapitalisation of more than Rs 25,000 crore.
"IDBI Bank is now poised for its next phase of growth," she said.
Congress Record
Sitharaman also accused the Congress of exerting political pressure on banks and financial institutions to extend loans without following prudent lending practices.
She cited several instances, including the Haridas Mundhra episode in 1957, when LIC funds were extended to him allegedly through the influence of Congress leaders.
She also referred to the removal of State Bank of India Chairman R.K. Talwar in 1976 after he resisted political pressure to relax lending conditions for a company linked to Sanjay Gandhi's circle.
The finance minister further alleged that Sanjay Gandhi had pressured Central Bank of India over loans to Maruti. She cited former Minister of State for Finance B. Janardhana Poojary, alleging that he pressured bank employees to issue loans during the 1980s.
Sitharaman also referred to former UPA minister Pawan Kumar Bansal, accusing him of pressuring Canara Bank to extend loans to businesses linked to his family.
"Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens," she said.
She added that the era of banks being pressured through telephone calls to extend loans was over and that ordinary citizens now had easier access to credit.
Gandhi's Objections
Gandhi, in a post on X on Thursday, said the Congress had established IDBI to support the country's industrial development, while the Modi government was now selling banks.
"During Congress's time, banks were being created. During Modi's time, they are being sold," he said.
He also shared a letter addressed to IDBI Bank employees, in which he said the lender's turnaround was the result of their efforts.
Gandhi recalled meeting a group of IDBI Bank employees at Parliament House in March last year. They had questioned why the government was selling a bank that they had helped make profitable, he said.
According to Gandhi, IDBI Bank was losing money seven years ago but earned a profit of more than Rs 9,000 crore last year.
कांग्रेस के समय में IDBI बना - देश का उद्योग खड़ा करने के लिए। मोदी के समय में पहले बोली देखी गई, फिर दाम तय हुआ। कांग्रेस के time पे बैंक बनते थे। मोदी के time में बिकते हैं। मैं IDBI बैंक के कर्मचारियों के साथ खड़ा हूँ। https://t.co/uLT7mWTYyr
— Rahul Gandhi (@RahulGandhi) October 30, 2026
He also questioned the government's decision to reduce its and Life Insurance Corporation of India's combined ownership from 95% to 34% following the sale.
Gandhi said the government had promised Parliament in 2003 that it would always retain at least 51% ownership in IDBI Bank. Although the commitment was not written into law, he said it was a promise made to Parliament and the people of India.
He also raised concerns over the implications of private ownership for reservations for Scheduled Castes, Scheduled Tribes and Other Backward Classes, as well as the service conditions of bank employees.
"The Congress has always believed in a strong public sector working alongside the private sector," Gandhi said, adding that public sector banks were instruments of nation-building rather than assets to be sold.
He said he supported the employees' demands and would stand with them in their opposition to the sale.
READ | Fairfax's Rs 52,878-Crore IDBI Bank Deal To Have Limited Impact On $2.3 Billion Cushion
Sale Process
Sitharaman's response came a day after the Finance Ministry issued a clarification on the strategic restructuring process for IDBI Bank.
In its statement on Thursday, the ministry said the initial bidding round was conducted in FY26 by the Department of Investment and Public Asset Management (DIPAM) under indicative guidelines that allowed flexibility in executing complex strategic transactions.
The ministry said there was no pre-determined benchmark for bidding. Prospective buyers conducted their own valuations and submitted confidential bids, while independent agencies separately valued the bank to assess whether the offers were reasonable.
It also explained that the government had provisions to deal with a situation in which the highest financial bid fell below the reserve price. The decision on the next course of action was left to the government under the request for proposal.
The ministry said the Cabinet Committee on Economic Affairs had empowered the Core Group of Secretaries on Disinvestment in August 2017 to address procedural difficulties and consider deviations where necessary to implement approved strategic disinvestment transactions.
Using these powers, the group determined the process for the second round of bidding, which involved inviting the best offers, the ministry said. It added that the reserve price had neither been increased nor reduced and that the first bidding round had ceased to have effect after the initial bids were not approved.
The valuation methodology was reviewed by the group in April 2026, ahead of the invitation for best offers. Two independent advisers used separate valuation methodologies, with the exercise based on financial information available up to March 31, 2026.
The ministry also said the potential liability arising from disputed tax demands was estimated at Rs 627 crore, while the bid-discovered price had increased by Rs 3,917 crore. It said the arrangement enhanced the value of the transaction for the government and LIC.
The government and LIC will retain residual stakes in IDBI Bank, allowing them to benefit from potential gains following the lender's strategic restructuring, the ministry said.
READ | Govt Defends IDBI Bank Sale Process, Says Best-Offer Round Followed Approved Procedure
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