Sitharaman says NDA revived IDBI Bank after UPA-era bad loan crisis

what happened

Indian Finance Minister Nirmala Sitharaman responded to Rahul Gandhi, who opposed the privatisation of IDBI Bank. She said the NDA government pulled the lender out of a bad loan trap caused by questionable underwriting under the earlier UPA government. She named companies that, in her account, received loans through political connections, including Videocon, Winsome, ABG Shipyard and Kingfisher. Those loans turned bad and caused heavy losses for the bank.

According to Moody's, Canadian investor Fairfax is set to take over IDBI Bank in what would be the largest cross-border deal in Indian banking. Sitharaman said the bank had been recapitalised by more than 25,000 crore rupees. On Thursday, the finance ministry said the core group of secretaries on disinvestment had reviewed the entire valuation methodology used in the stake sale.

why it matters

For investors, the deal matters as a major foreign entry into India's banking sector. The dispute over the valuation process and the choice of the best offer could affect expectations for the timing and terms of completion.

market impact

IDBI Bank and India's banking sector: the foreign stake sale and the process dispute shape expectations for the deal

tags

instruments