There is no proposal of raising foreign direct investment limit in PSU banks to 49% from 20%, Minister of State for Finance Pankaj Chaudhary said on Tuesday, in response to a query raised in Parliament.
As per current laws, the FDI limit in PSBs and private sector banks are 20% and 74%, respectively. In case of private banks, up to 49% of FDI is allowed through the automatic route and beyond 49% and up to 74% require government clearance.
Further, as per Reserve Bank of India's Master Directions, share acquisition of a bank resulting in any person owning or controlling 5% or more of the paid-up capital of the bank, requires prior approval of RBI.
The minister also shared data on FPI stake in PSU banks from fiscal 2020 to the last financial year.
Foreign ownership in State Bank of India has risen to 11.07% in March 2025 from 10.95% in March 2020. Canara Bank's has jumped from 3.31% to 10.55% during the same period. Other notable rise includes Bank of Baroda (4.89% to 9.43%) and Union Bank of India (1.34% to 7.48%).
The government is mulling major reforms in bank ownership, opening up the space for foreign investors and a higher threshold for rights. Proposals have been circulated in the higher offices of the government, discussing a new foreign direct investment limit for public sector lenders and reviewing the voting rights cap for owners, NDTV Profit reported last month, quoting sources.
Bank Deals This Year
India's private banking sector has drawn massive investment from foreign institutions in 2025.
Blackstone Inc., the world's largest alternative asset manager, announced in October it will acquire a minority stake in Federal Bank Ltd. for Rs 6,196 crore.
UAE's second largest lender Emirates NBD agreed to acquire a majority stake in RBL Bank Ltd. for $3 billion in the same month.
IDFC FIRST Bank Ltd. received investment commitments from Warburg Pincus and Abu Dhabi Investment Authority.
Sammaan Capital Ltd. had drawn interest from Abu Dhabi's International Holding Co. for Rs 8,850 crore.
In May, Japan's Sumitomo Mitsui Banking Corp. announced a $1.6 billion deal for 20% stake in Yes Bank Ltd.
Bain Capital plans to go for an 18% stake in Manappuram Finance Ltd. for Rs 4,385 crore, followed by an open offer.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
