From Mundhra to Kingfisher: FM Sitharaman trains guns on Congress over alleged banking irregularities

Finance Minister Nirmala Sitharaman on Friday accused the Congress of using banks and financial institutions for political purposes during its tenure, alleging that party leaders pressured bank officials to extend loans by bypassing prudent lending norms. Defending the government's strategic restructuring of IDBI Bank, she said the Narendra Modi-led NDA government had revived the lender through professional management, prudent lending practices, and recapitalisation of more than ₹25,000 crore. 

In a post on X, Sitharaman cited several instances of alleged political interference in banking during Congress-led governments, including the Haridas Mundhra-LIC controversy of 1957, the removal of State Bank of India (SBI) Chairman R.K. Talwar in 1976, and alleged pressure on banks to extend loans to businesses linked to political leaders. 

"The IDBI Bank was handed over to us in poor shape," Sitharaman said, alleging that the lender had been forced to extend loans to large business groups with close connections to Congress leaders. She cited Videocon, Winsome, ABG Shipyard, and Kingfisher among the groups whose loans turned into bad assets, resulting in losses for the bank. 

Sitharaman said the NDA government had recognised these losses and taken steps to revive the lender. She added that all due processes had been followed in IDBI Bank's strategic restructuring and that the government had already clarified its position on the matter. 

Sitharaman cites historical instances of alleged political interference 

Listing instances of alleged political interference in lending decisions, Sitharaman referred to the 1957 Mundhra scandal, in which the Life Insurance Corporation's investments in shares of companies associated with businessman Haridas Mundhra triggered a major controversy. 

She also cited the removal of SBI chairman R.K. Talwar in 1976, alleging that he had resisted political pressure to relax lending conditions for a company linked to Sanjay Gandhi's circle. She further alleged that Sanjay Gandhi had pressured Central Bank of India over loans to Maruti. 

The finance minister also referred to B. Janardhana Poojary, who served as minister of state for finance under Indira Gandhi and Rajiv Gandhi, alleging that he pressured bank employees to issue loans during the 1980s. She cited Pawan Kumar Bansal, a minister in the United Progressive Alliance (UPA) government, over alleged pressure on Canara Bank to extend loans to businesses linked to his family. 

Sitharaman said several other instances of alleged financial irregularities and economic mismanagement had been documented in the White Paper on the Indian economy released in February 2024. 

"Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens," she said, arguing that the era of politically influenced lending had ended. She added that ordinary citizens now had easier access to loans and bank employees were no longer under pressure to extend credit following telephone calls from influential people. 

The finance minister also invoked the controversy surrounding the Rafale fighter jet deal, saying allegations made by the Congress had been exposed and predicting a similar outcome in the current dispute. 

Earlier clash over Tata and Indian industry 

Sitharaman's latest remarks follow a separate exchange with Congress leader Rahul Gandhi on Wednesday over his comments on the Tata Group. Gandhi had alleged on X that "Tata is being criminally destroyed, and no business leader dares say a word". 

Responding to the post, Sitharaman accused the Leader of the Opposition in the Lok Sabha of politicising commercial and legal matters and attempting to create distrust among India's business leaders. "Being the LoP @RahulGandhi, I suggest you refrain from politicising every issue. Also, casually labelling commercial and legal matters as criminal is unacceptable," she said. 

Sitharaman also accused Gandhi of repeatedly criticising the achievements of Indian industry and entrepreneurs, questioning whether he was trying to persuade business leaders to join him in spreading what she described as "distrust & toxicity". 

She said the central government viewed Indian businesses as job creators and drivers of economic growth, adding that its policies were designed to support enterprise, industry and investment.