Finance Minister Nirmala Sitharaman on Wednesday responded to remarks made by Samajwadi Party leader Akhilesh Yadav concerning the government's plan to transfer a majority ownership stake in IDBI Bank to Fairfax Financial Holdings. Sitharaman maintained that political allies of the Opposition had left public sector banks weakened through preferential lending arrangements and the favouring of well-connected borrowers.
Yadav had voiced opposition to the government's plan to transfer a controlling interest in IDBI Bank to a Fairfax Financial Holdings subsidiary, describing the transaction as a clearance-style disposal of public assets, and added that the administration appeared to have little left to offload. Yadav also argued that the governing party appeared to be accelerating a series of decisions in its final stretch in office, drawing a parallel to a business marking down inventory before shutting down for good.
Addressing Yadav in parliament, Sitharaman said public sector banks had been left in a weakened state under the Congress-led UPA administration, which her party's opponent had backed from 2004 onward. She noted that the public banking sector the incoming administration took over showed signs of financial strain at the time of the transition.
Sitharaman went on to contend that opposition allies within the INDI Alliance had themselves presided over the deterioration of public sector banks through politically directed lending and preferential access to credit. She pointed specifically to IDBI Bank's conduct under the UPA administration — a period backed by the opposing party — during which loans were extended to certain borrowers whose outstanding principal and accrued interest the current government was working to recover.
Sitharaman attributed the turnaround in the banking sector, including at IDBI Bank, to policy reforms and capital injections carried out under the NDA administration, and questioned whether critics who had opposed those measures were now expressing concern about institutions that had since stabilised financially.
A cabinet-level decision cleared the transfer of a 60.72% controlling interest in IDBI Bank to Fairfax Financial Holdings, with the transaction valued at Rs 52,878 crore. Under the deal as outlined, the government would offload a 30.48% holding, with LIC parting ways with a further 30.24% of its shares. Once the transaction closes, ownership of IDBI Bank will be split between the government at 15% and LIC at 19%, giving the two parties a combined 34% ownership stake.
Sitharaman responded positively to the Cabinet Committee on Economic Affairs' approval of a strategic restructuring of IDBI Bank, indicating that the decision was expected to move the bank into its next phase of expansion by opening the door to foreign direct investment. The Finance Minister indicated that the government plans to retain a minority ownership share in the lender, adding that the deal is expected to support the broader development of the country's banking sector and lift the quality of services available to customers. A statement attributed to the Cabinet Committee on Economic Affairs described the IDBI Bank restructuring approval as a step forward in the nation's ongoing reform agenda.
The bank's next growth phase is being facilitated through a foreign direct investment infusion, with a minority stake retained, following earlier stabilisation work carried out on its behalf. Proponents have argued the move could reinforce the financial sector's foundations while positioning its services to meet internationally recognised standards.
In an online post, Sitharaman put forward the view that the country's expansion trajectory remains on solid footing, its economic foundations have held firm, and those in power have shown no sign of retreating from their reform agenda.
