Foreign firms being allowed to acquire Indian banks imprudent, poses substantial risks: Cong   

The Congress on Sunday said foreign firms gradually being allowed to acquire Indian banks was “imprudent” as it poses substantial risks and recalled that the Jan Sangh had criticised then prime minister Indira Gandhi for not nationalising foreign banks in July 1969.

Congress general secretary in-charge communications Jairam Ramesh’s assertion came after Emirates NBD Bank, the second largest in the UAE, expressed interest in acquiring a majority 60 per cent stake in RBL Bank for Rs 26,853 crore—the biggest ever financial sector deal in value terms.

“Foreign firms are gradually being allowed to acquire Indian banks. These imprudent moves pose substantial risks,” Ramesh said on X.

First, Laxmi Vilas Bank was acquired by Singapore’s DBS Group and the Catholic Syrian Bank was acquired by Canada’s Fairfax, he said.

“Third, Japan’s Sumitomo Mitsui Banking Corporation took over Yes Bank. Now comes news that Dubai’s Emirates NBD is acquiring RBL Bank,” the Congress leader said.

“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,” he added.

Just as a matter of historical interest, Ramesh said, the Jan Sangh had criticised Indira Gandhi for not nationalising foreign banks in July 1969.

He also shared a news report dated December 28, 1969, after the Jan Sangh’s meeting in Patna the previous day in which it had called for the takeover of all big foreign firms.

The acquisition plan of Emirates NBD Bank to hold a controlling stake in RBL Bank through an infusion of approximately USD 3 billion (about Rs 26,850 crore) marks the largest-ever foreign direct investment in India’s financial services sector.

The proposal comes days after Japan’s SMBC picked up a 24.9 per cent stake in Yes Bank for a total consideration of Rs 16,333 crore.

The board of RBL Bank while approving the quarterly financial number approved the proposal for raising up to Rs 26,853 crore from Emirates NBD Bank subject to various regulatory filing, the bank said in a regulatory filing.

About NBD Bank’s deal, RBL Bank in a statement said that the landmark transaction represents a strong vote of confidence in the bank’s business model, governance and growth potential.