'You will have to apologise like Rafale': Sitharaman accuses Rahul Gandhi of spreading falsehoods on IDBI sale

Finance Minister Nirmala Sitharaman on Friday accused Rahul Gandhi of spreading falsehoods about the proposed IDBI Bank sale and warned that he would have to apologise, as he did during the Rafale controversy. Her attack followed criticism from the Leader of the Opposition over the Union government's decision to sell a controlling stake in the bank to Canada's Fairfax Financial Holdings.

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In a post on X, Sitharaman defended the government's handling of the lender and accused previous Congress administrations of allowing political influence to shape bank lending. Rahul Gandhi has questioned both the decision to privatise the bank and the manner in which the sale price was determined.

Rahul Gandhi questions sale of IDBI Bank to Fairfax

In a post on X, Rahul Gandhi said IDBI was established during Congress rule to finance industrial development and argued that the present government was selling an institution built with public money. He also said the government had examined the bids before settling on a price and declared his support for IDBI Bank employees opposing the sale.

"During Congress's time, banks were being created. During Modi's time, they are being sold," he said.

Sale of IDBI Bank to Fairfax

On October 14, the Cabinet Committee on Economic Affairs approved the sale of a combined 60.72 per cent stake in IDBI Bank to Fairfax's Canadian subsidiary for about Rs 52,878 crore. The government will sell 30.48 per cent and Life Insurance Corporation of India (LIC) another 30.24 per cent. 

Sitharaman accuses Congress of interfering in bank loans

Sitharaman alleged that Congress leaders had treated financial institutions as instruments of political influence, citing cases stretching back several decades. She referred to the 1957 Haridas Mundhra-LIC controversy and claimed that SBI chairman R K Talwar was removed in 1976 after resisting pressure to ease lending conditions for a company associated with Sanjay Gandhi's circle.

Government defends IDBI Bank revival and sale valuation

Turning to IDBI's finances, Sitharaman claimed that loans to companies including Videocon, Winsome, ABG Shipyard and Kingfisher had turned into bad debts after the bank was pushed to lend to business groups with Congress connections.

She said the Modi government had restored the bank's financial health through improved lending practices, professional management and more than Rs 25,000 crore in recapitalisation. She maintained that due procedure had been followed in selecting the buyer.

The Finance Ministry, in a clarification issued on Thursday, defended the valuation process. It said independent assessments put the benchmark at Rs 75.99 a share, below Fairfax's accepted offer of Rs 81. The ministry also said a further round of bidding had increased the transaction value by Rs 3,917 crore.

Finance Minister invokes Rafale row and 2024 White Paper

"Your lies with respect to Rafale had failed and were exposed. You had to apologise. The same will happen here," Sitharaman said.

Sitharaman also cited the government's February 2024 White Paper on the economy and accused Congress-era governments of favouring well-connected borrowers.

"Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens," she said, asserting that political calls no longer dictated lending decisions.

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