The proposed sale of IDBI Bank has triggered a fresh political confrontation between the Congress and the BJP, with Leader of the Opposition Rahul Gandhi backing bank employees against the deal and Union Finance Minister Nirmala Sitharaman defending the government's decision to sell a majority stake in the lender to a subsidiary of Canada's Fairfax Financial Holdings.
The exchange, which played out over letters and social media posts this week, has turned a major banking transaction into one of the sharpest political arguments of the season, raising questions about public ownership, employee protections and the history of political influence over India's banks.
In a letter addressed to IDBI Bank employees on October 29, Gandhi questioned why the government was selling a bank that had returned to profitability. He said the institution had been built using public money and should not be treated as an asset to be sold off. Gandhi noted that IDBI Bank had reported a profit of more than Rs 9,000 crore in the previous financial year, crediting employees for its turnaround, and said the bank was created to support industrial development.
In a post on social media, he sharpened the charge, writing that during the Congress's time, banks were being created, while during the present government's time, they are being sold, and declaring that he stands with the employees of IDBI Bank.
Gandhi also referred to a 2003 assurance made by the government in Parliament that it would retain at least 51 per cent ownership in IDBI. He argued that the proposed transaction would take the combined government and Life Insurance Corporation holding from around 95 per cent to 34 per cent.
He raised concerns about the future of reservation provisions for Scheduled Caste, Scheduled Tribe and Other Backward Class employees, along with existing service conditions, and about what privatisation would mean for the workforce that had nursed the bank back to health.
The Union Cabinet approved the sale of a 60.72 per cent stake in IDBI Bank on October 14 for Rs 52,878 crore to a subsidiary of Fairfax Financial Holdings. Under the deal, the government and LIC will retain 15 per cent and 19 per cent stakes respectively. The finance ministry has said the revised bidding process raised the discovered price by Rs 3,917 crore and capped the tax indemnity liability at Rs 627 crore.
The ministry has also defended the valuation process, saying the reserve price was neither decreased nor increased, and that the first bidding round became functus officio after the initial bids were not approved.
Responding to Gandhi on October 30, Sitharaman rejected his criticism and said the government had followed due process. In a post on social media, she wrote that all due process had been followed in the IDBI Bank strategic restructuring, and that the ministry had already clarified the position.
She accused Congress governments of using banks and financial institutions as personal entities and pressuring bank employees to extend loans to influential individuals and businesses, bypassing prudent lending norms. She described Congress-era banking as having a phonebook for the powerful and a rulebook for common citizens.
Sitharaman cited several historical episodes to support her case. She referred to the 1957 LIC investment involving businessman Haridas Mundhra, the removal of State Bank of India chairman R K Talwar in 1976 after he refused political pressure to relax lending conditions, and allegations of political pressure over loans linked to Maruti.
She also referred to loans from Central Bank of India to Maruti, and named former minister of state for finance B Janardhana Poojary and former minister Pawan Kumar Bansal in connection with Canara Bank.
The finance minister said IDBI Bank had been handed over to the present government in poor shape after lending to large business groups with links to Congress leaders, naming Videocon, Winsome, ABG Shipyard and Kingfisher, whose loans subsequently turned into bad loans and caused substantial losses.
According to Sitharaman, the present government revived the bank through professional management, prudent lending practices and recapitalisation of more than Rs 25,000 crore, and the bank is now poised for its next phase of growth. She has called the transaction a strategic restructuring, saying it should not be viewed as strategic disinvestment.
She also referred to Gandhi's past remarks on the Rafale deal, saying his claims there had failed and been exposed and that he had to apologise, and that the same would happen in the IDBI case. The finance minister said it was unacceptable to label commercial and legal matters criminal without basis, and questioned whether Gandhi was trying to encourage business leaders to join him in spreading distrust.
The numbers at the heart of the dispute are not themselves in doubt. IDBI Bank's net profit rose 27 per cent to Rs 9,513 crore in 2025-26 from Rs 7,515 crore in the previous year, a turnaround that both sides acknowledge. The disagreement is over what that turnaround means.
For Gandhi and the employees' unions, a profitable bank built with public money should remain under majority public ownership, and selling it now amounts to giving away an asset just as it has recovered. For the government, the turnaround is precisely what makes a strategic sale possible, and the proceeds, together with a stronger private partner, will allow the bank to grow further while the Centre and LIC retain a combined 34 per cent stake.
The employees themselves have entered the fray. The United Forum of IDBI Officers and Employees has issued a strike notice opposing the sale, and staff plan a two-day nationwide hunger strike on November 2 and 3. Their concerns go beyond the ownership question to the practical terms of their employment, including service conditions, transfer policies and the future of reservation provisions.
The government has maintained that due process has been followed and that the transaction has been handled transparently, but the unions are seeking a parliamentary review of the sale.
The IDBI dispute follows another recent exchange between Gandhi and Sitharaman over the Tata Group, in which Gandhi alleged that the group was being criminally destroyed and said business leaders were afraid to speak out. Sitharaman accused him of politicising the issue and said it was unacceptable to label commercial and legal matters criminal without basis.
The back-to-back exchanges suggest that the politics of business and banking will remain a live battleground, with the opposition seeking to frame asset sales as a transfer of public wealth and the government presenting them as reform.
What happens next will depend on regulatory clearances, including approval from the Reserve Bank of India, which the proposed acquisition by Fairfax will require. The government and LIC are expected to retain their stakes after the transaction, and the bank's operations will continue through the transition. For employees, customers and investors, the coming weeks will clarify the timeline and the terms.
For the political debate, the IDBI sale has already become a test case in a much older argument about who India's banks serve, and about the line between legitimate reform and the disposal of public assets.
(Reporting based on Outlook India and The Economic Times.)