A post is being circulated on social media claims that former Indian Prime Minister Manmohan Singh privatized ICICI, Axis, and HDFC banks during his tenure as the Finance Minister in PV Narsimha Rao Government. This post claims all three banks were started as government-owned nationalized banks and later got privatized while Manmohan Singh was serving as the Finance Minister of India. Let’s verify the claim made in the post.
Claim: Former Indian PM Manmohan Singh privatised ICICI, Axis and HDFC banks while serving as the Finance Minister of India.
Fact: Indira Gandhi nationalized 14 commercial banks in 1969 and another 6 commercial banks in 1980. ICICI, Axis, and HDFC banks were not on the list of these banks. In 1993, PV Narsimha Rao Government provided licenses to new private sector banks as part of the new liberalization reforms in the Indian banking sector. ICICI, Axis, and HDFC banks are few among these. These are private sector banks that were never nationalised by the Indian Government. Hence, the claim made in the post is FALSE.
On searching for the details of the claim made in the post, we found no reports mentioning ICICI, Axis, and HDFC banks as nationalised banks that got privatised during PV Narasimha Rao’s tenure as PM. When we searched for further details, it is found that Indira Gandhi nationalised 14 commercial banks in 1969 and another 6 commercial banks in 1980. ICICI, Axis, and HDFC banks were not on the list of these 20 banks. Manmohan Singh during his tenure as the Finance Minister in PV Narsimha Rao’s Government introduced new financial reforms in the banking sector. In January 1993, the PV Narsimha Rao Government released guidelines for the licensing of new banks in the private sector. PV Narasimha Rao Government started giving licenses to small private banks. ICICI, Axis and HDFC bank, and few other banks got licences under this initiative.
ICICI was established in 1955 as a private financial institution that provided mid-term and long-term project financing to the Indian industries. With the liberalization of the financial sector in the early ‘90s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services provider. ICICI bank was incorporated in 1994 as part of the ICICI group. So, it can be concluded that ICICI bank was established after the new financial reforms brought by Manmohan Singh in the PV Narasimha Rao Government.
HDFC Bank is one of India’s leading private banks and was among the first to receive approval from the Reserve Bank of India (RBI) to set up as a private sector bank in 1994.
Axis Bank is an Indian private sector bank that was promoted jointly by Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India), Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), National Insurance Company Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited and United India Insurance Company Limited In 1993. Axis Bank has begun its operations in 1994, which was then called UTI Bank. Axis bank (then UTI Bank) is a private sector bank that was established during the new financial reforms brought by the PV Narasimha Rao Government.
Unit Trust of India Act, 1963 was repealed in 2003 paving way for the bifurcation of UTI into Specified Undertaking of Unit Trust of India (SUUTI) and UTI Mutual Fund. And subsequently, Axis bank shareholdings of Unit Trust of India were transferred to SUUTI. In 2013-14, during Manmohan Singh’s tenure as PM, the government’s share was divested through a sale of minority shareholding of 9%. Further, a share of 9.29% & 0.41% minority stakes were disinvested in 2018-19 & 2020-21 during Modi’s tenure as PM.
If at all HDFC and ICICI banks were government entities that were privatised later, the details of their privatisation (disinvestment) would have been available in the public domain. However, we did not find any mention of these banks in the information related to disinvestment of government shareholdings since 1991, when the sale of government stake in public sector undertakings first began.
In fact, the Reserve Bank of India’s (RBI) annual report of 1992-93 mentions that a number of applications were received for setting up private banks after the change of policy in 1993. The report further mentions that three of them belonging to financial institutions Unit Trust of India – UTI (now Axis Bank), Housing Development Finance Corporation of India Ltd (HDFC) and Industrial Credit & Investment Corporation of India Ltd (ICICI) have been approved in principle.
To sum it up, ICICI, AXIS, and HDFC banks are the private sector banks established during the new financial reforms brought by Manmohan Singh during PV Narsimha Rao’s tenure as PM.