No Proposal To Relax FDI Limit In Banks, Says Government

Putting to rest speculations on raising the FDI limit in public sector banks, Economic Affairs Secretary Subhash Chandra Garg said there is no such proposal and also ruled out their privatisation. "There is no such proposal for relaxing FDI limit (in public sector banks)," Garg told PTI in an interview.

Currently, 20 percent foreign investment is permitted in PSU banks under government approval route. However, the same is 74 percent for private sector banks provided there is no change of control and management of the investee company.

When asked if the government is considering any proposal for privatising state-owned banks, Garg said: "I don't think there is any proposal for privatisation of any bank."
According to experts, increase in foreign investment would result in flow of capital which PSU banks require urgently. The government can provide limited support to these banks as the resources are limited.

Last year, the government announced an aggressive Rs 2.11 lakh crore capital infusion for the NPA-hit public sector banks (PSBs) over a period of two years. Out of this, the government has already infused Rs 88,139 crore in 20 PSBs in 2017-18, with IDBI Bank getting the most -Rs 10,610 crore. In the last three-and-a-half years, the government pumped in more than Rs 51,000 crore capital into PSBs.