The Congress on Sunday termed the acquisition of Indian banks by foreign firms “imprudent” and claimed that it posed substantial risks.
Congress general secretary in charge of communications Jairam Ramesh’s assertion came after Emirates NBD Bank offered to buy a 60 per cent stake in RBL Bank for ₹26,853 crore. If the plan materialises, it will be India’s biggest financial sector deal.
“Foreign firms are gradually being allowed to acquire Indian banks. These imprudent moves pose substantial risks,” Ramesh wrote on X.
The red carpet for foreign banks was rolled out in 2013 when the Manmohan Singh government relaxed norms to attract investments after the global financial crisis.
However, Ramesh highlighted three major acquisitions of Indian banks by foreign firms since 2020 — including the amalgamation of the financially distressed Lakshmi Vilas Bank with the Indian subsidiary of Singapore-based DBS Bank, which the RBI facilitated.
The other two deals he referred to were the acquisition of Catholic Syrian Bank by Canada’s Fairfax and the takeover of Yes Bank by Japan’s Sumitomo Mitsui Banking Corporation.
“And, of course, India’s first full privatisation of a public sector bank is expected to be completed in this financial year. This is the sale of IDBI Bank," Ramesh said.
Posting a news report from 1969 on the Jan Sangh’s working committee meeting in Patna, Ramesh recalled how the party had criticised then Prime Minister Indira Gandhi for not nationalising foreign banks.
“Just as a matter of historical interest, the Jan Sangh had criticised Indira Gandhi for NOT nationalising foreign banks in July 1969,” he wrote.
Efforts to privatise IDBI Bank over the past decade had remained a non-starter, and the LIC was directed to acquire a major stake in it to cover for its mounting non-performing assets in 2019.
In August, the Centre announced that it would soon invite bids to offload stake in IDBI, a move that the bank employees had opposed.