Were Axis, HDFC Bank, ICICI Bank PSUs Before Privatisation? A FactCheck

The viral post presents an oversimplified history of these banks, stating that they were publicly owned and later privatised.

Several claims have gone viral on social media claiming that the country's top private sector banks - ICICI Bank, HDFC Bank and Axis Bank - were once government entities under the Congress rule and were privatised later during the 1990s.

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, Finance Minister Nirmala 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 claim can be read below. It narrates the evolution of these three banks in an oversimplified manner, claiming that they were "Government of India organisations" that were later privatised.

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 organisation 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.

These claims have been made on social media several times.



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. 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.

Though several public-sector institutions had a stake in ICICI, it was considered to be private. For example, IDBI Bank is also considered to be a private-sector bank from Jan 21, 2019. It was a public-sector bank directly owned by the Government of India, until the Life Insurance Corporation of India acquired a controlling stake in the bank.

A loan document to ICICI by the Asian Development Bank [ADB] as of November 1996 also acknowledges the private status of ICICI :

ICICI was established in 1955 as a private sector development finance institution (DFI), under the Companies Act of 1913, to encourage and assist industrial development and investment in India. As a result of nationalization of major commercial banks and insurance companies (which were the shareholders of ICICI) in 1969, over 80 percent of its issued share capital was held by public sector corporations. Despite the majority public sector shareholding until the 1990, ICICI maintained the dynamism of a private sector DFI.

ICICI Bank came much later - specifically in 1994, and was separate from ICICI.

In 2002, ICICI and two of its subsidiaries were merged into ICICI Bank, which merged the group's financing and banking operations into a single entity. Contrary to the claim, ICICI or ICICI Bank were not made private.


HDFC Bank traces its roots to Housing Development and Finance Corporation (HDFC) - correctly identified by the claim - which exists till today and is one of India's largest housing finance corporations (HFC).

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.

As HDFC also states in its journey from 1972 - 1977, "It [HDFC] was the first of its kind in the country. His [Parekh's] setting up of HDFC, without any financial assistance from the Government of India was a milestone in the Indian financial history."

Other official sources also verify the private-sector nature of HDFC. In its completion report on a housing finance project in India as of August 2003, the ADB states,

The Housing Development Finance Corporation Ltd. (HDFC) was established in 1977 as a public limited company to provide housing finance to individuals. As the first private HFC, its operations grew rapidly and it continues to be the market leader in the retail housing finance sector despite the emergence of a number of HFCs.

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

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, split into SUUTI (Specified Undertaking of Unit Trust of India) (established in 2003) and UTI Mutual Fund. The former oversaw UTI's assured returns investments and the latter administered market-linked plans. The shareholding of UTI in Axis Bank in 2003 was transferred to SUUTI. In 2007, UTI Bank was renamed Axis Bank.

However, UTI Bank or Axis Bank were never public-sector undertakings that were privatised. Axis Bank themselves state that they were among the first of the new-generation private players.

It's history can be read here.

Claim :   ICICI, HDFC and Axis Bank were PSUs that have been privatised
Claimed By :  Rishi Bagree
Fact Check :  Misleading
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