Many social media users are sharing a post claiming that the ICICI bank, HDFC bank and Axis bank were all government banks earlier, which were later privatised when Late PV Narasimha Rao was Prime Minister and Manmohan Singh was the Finance Minister. The post is being shared to portray that Congress also privatised many banks of India.
These claims seek to stem the criticism faced by the current Narendra Modi government for its decision to privatise several public sector institutions. In her Union Budget 2021 speech, Sitharaman announced plans to privatise two public-sector banks and one general insurance company. The three private sector banks mentioned in the social media claims were associated with developmental and financial bodies that catered to industrial and housing finance, and were never owned directly by the government. Their journey into formal banking began after liberalisation in the mid-1990s. In fact, these banks have always been referred to as the ‘new-age private sector banks.
The post says, “A brilliant lie is spread that the Congress creates government banks and the Modi government sells them…Lets go back in history. Today, the three largest banks in the private sector, ie ICICI Bank HDFC Bank and Axis Bank, all three used to be government but Manmohan Singh, who was the Finance Minister in PV Narasimha Rao government, sold them.(these have eaten away into the business of Govt banks over the decades). ICIC’s full name was Industrial Credit and Investment Corporation of India… It was a Government of India organization that used to give loans to big industries but in one stroke Finance Minister Manmohan Singh disinvested it and made it private and its name And ICICI Bank is done. Today, HDFC Bank, its full name was Housing Development Corporation of India, it used to be an organization of the Government of India which used to give home loans to the middle class people at cheap interest. Manmohan Singh, who was the finance minister in the Narasimha Rao government, said that the government’s only job is to govern, not sell home loans. The statements of Manmohan Singh, in which he describes privatization as the most important step for development and says that the government’s job is only to run the government, not to give a loan to run a bank is in Public domain. And in one stroke, Finance Minister Manmohan Singh sold HDFC Bank and it became a private sector bank. This is a very interesting story of Axis Bank. There used to be an organization of the Government of India, its name was Unit Trust of India. This institution was formed to promote small savings, that is, you could deposit small amounts in it. Manmohan Government, Finance Minister Manmohan Singh said in Narasimha Rao government. The government’s job is not to run the scheme of chit fund and it was sold in one stroke, first it was named UTI Bank and later it was named Axis Bank.”
ICICI Bank was previously known as ICICI – the Industrial Credit and Investment Corporation of India Limited – but it did not start off as a bank. Though several public-sector institutions had a stake in ICICI, it was considered to be private. It was a development finance institution (DFI) established in 1955 to give credit to the industrial sector. It was an initiative of the World Bank, Government of India, several banks and other insurance companies in India.
HDFC was set up in 1977 by Hasmukh Parekh. A spokesperson of HDFC told BOOM that 5% of the institution was owned by the International Finance Corporation (the financing arm of the World Bank Group), 5% by His Highness the Aga Khan and 5% by ICICI. The remaining 85% was publicly held (by shareholders). “HDFC had nothing to do with the government in terms of equity”, he said. HDFC Bank was a result of HDFC being among the first financial institutions in India to receive an “in principle” approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The bank itself was established in 1995, when RBI allowed the establishment of new private-sector banks in 1994.
Axis Bank was founded as UTI Bank that began operations 1994 was promoted by the Unit Trust Of India (UTI), and a number of public-sector undertakings, namely LIC, the General Insurance Corporation of India, the National Insurance Company, The New India Assurance Limited, the Oriental Insurance Company Limited and United India Assurance Company. In 2002, when UTI was disbanded, it was split into SUUTI (Specified Undertaking of Unit Trust of India) (established in 2003) and UTI Mutual Fund. The shareholding of UTI in Axis Bank in 2003 was transferred to SUUTI. In 2007, UTI Bank was renamed Axis Bank.
Thus, the viral claim is misleading.
