Sitharaman defends IDBI divestment, hits out at Congress lending practices

Finance Minister Nirmala Sitharaman on Tuesday defended the Modi government's divestment of IDBI Bank to private equity firm Fairfax, dismissing criticism from the opposition Congress party.

Responding to Congress leader Rahul Gandhi's attacks on the sale, Sitharaman alleged that governments led by the Congress during the UPA era had treated banks and financial institutions as "personal entities." She claimed that previous administrations had pressured bank employees to extend credit at their discretion, undermining the institutions' independence and financial health.

The Finance Minister's comments reflect the government's broader defense of its bank privatization agenda, which aims to reduce public sector presence in the financial sector. The IDBI Bank sale to Fairfax, completed earlier this year, marked a significant step in this direction.

The divestment has drawn criticism from opposition parties, which argue that privatization threatens the reach of banking services to rural and underserved populations. Congress leaders have questioned the valuation and the process adopted for the sale, contending that the government undervalued a critical financial institution.

Sitharaman's response underscores the ongoing political debate over the government's economic policies and the role of public sector banks in India's financial architecture. The finance ministry has previously argued that strategic divestment allows the government to focus on strengthening remaining public sector banks while improving operational efficiency across the sector.