FinMin mulls raising FDI cap in PSBs

The Finance Ministry is considering increasing the foreign direct investment (FDI) limit in public sector banks (PSBs) to 49 per cent from the existing 20 per cent to strengthen their capital base, Financial Services Secretary M Nagaraju said on Sunday.

“We are still considering the proposal, and inter-ministerial consultations are underway for raising the FDI cap to 49 per cent,” Nagaraju told reporters.

At present, foreign investment in PSBs is capped at 20 per cent, while private sector banks are allowed to receive up to 74 per cent FDI. Any increase in the FDI limit for PSBs would require approval from multiple stakeholders and may involve legislative changes.

The move, if implemented, is expected to help public sector lenders access additional capital, improve financial resilience and support credit growth in the economy.