Rahul Gandhi Backs IDBI Bank Staff Against Fairfax Sale; Sitharaman Hits Back Over Congress-Era Lending

The sale of IDBI Bank to Canada's Fairfax Financial Holdings became a direct political fight on Friday. Leader of the Opposition Rahul Gandhi published an open letter backing the bank's employees against the deal, and Finance Minister Nirmala Sitharaman answered within hours with a detailed attack on how the Congress had run public banks.

The Centre approved the sale on October 14. Fairfax will buy a 60.72% stake for about Rs 53,000 crore at Rs 81 a share (see our earlier coverage).

Gandhi's case: a promise to Parliament

In the letter, dated October 29 and addressed to the IDBI Bank family, Gandhi said a group of employees had met him in Parliament last year. They asked why the government was selling a bank they had turned around, and he said he raised the question in the Lok Sabha but got no answer. He pointed out that IDBI was losing money seven years ago and earned more than Rs 9,000 crore last year, and credited that turnaround to the staff.

His main political argument is about ownership. The government and LIC now hold about 95% of the bank, and after the sale they will hold about 34%. Gandhi said the government had promised Parliament in 2003 that it would always keep at least 50%. He conceded that the promise was never written into law but called it a commitment to the people. He also warned that private ownership would end reservation for SC, ST and OBC candidates in hiring and weaken employees' service conditions.

Sharing the letter on X, he contrasted the two eras: under the Congress, he said, banks were created to build industry, while under Prime Minister Narendra Modi they are being sold. He also said that in this deal the bids were seen first and the price fixed afterwards.

Sitharaman's counter: the lending record

Sitharaman replied on X with a list of episodes going back to 1957, including the 1976 removal of SBI chairman R K Talwar. She said IDBI had been pushed under Congress governments to lend to groups such as Videocon, Kingfisher and ABG Shipyard. She credited the NDA government with reviving the bank through more than Rs 25,000 crore of recapitalisation, and said all due process had been followed in its strategic sale. Banking under the Congress, she said, had worked on phone calls and connections, while ordinary borrowers now get loans more easily.

The valuation question underneath

Gandhi's remark that the bids came before the price points to a narrower dispute that the government had already tried to answer. On Thursday, the Department of Investment and Public Asset Management said the second, best-offer round of bidding followed a procedure set by the Core Group of Secretaries on Disinvestment, which the Cabinet had authorised. It said the reserve price was neither raised nor lowered.

The department also said there is no fixed benchmark in a strategic sale. Bidders make their own valuations, and the estimates from independent valuers are used only to judge whether a bid is reasonable, so the two can come in above or below each other. Fairfax's Rs 81 is above the Rs 75.99 fair value set by two independent agencies, a figure the government keeps citing.

The deal still needs Reserve Bank of India approval and is expected to close by the end of this financial year. The employee unions are opposing it and the Congress is now formally on their side, so the sale is likely to remain a live political issue until the RBI decides.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.