The Government of India is planning to increase the foreign direct investment (FDI) limit in state-owned banks from the current 20% to 49%, financial services secretary M. Nagaraju said on Monday.
“Proposal to raise the FDI cap in PSU banks is under active consideration, keeping capital requirements in mind,” he said.
The FDI limit in PSBs and private sector banks is 20% and 74%, respectively. In case of private sector banks, up to 49% of FDI is through the automatic route and beyond 49% and up to 74%, the government route is applicable.
He also said that PSU banks will launch qualified institutional placement (QIP) of shares worth about Rs 50,000 crore in the fiscal year 2026-27 (April-March), more than the planned Rs 45,000 crore in the current fiscal year.
Earlier, there were reports that the Government may increase the FDI limit in Public Sector Banks, but the Government has denied these claims. But Minister of State for Finance Pankaj Chaudhary said in December 2025 that the government is not considering any proposal to raise the FDI limit in public sector banks to 49%, from the current 20%.
The government may also launch an offer next year to sell a portion of its stake in Life Insurance Corporation. An expert panel from the Indian Institute of Management Kozhikode (IIMK) has suggested major reforms in India’s insurance sector to make it more efficient and accessible. IIM Kozhikode has recommended splitting LIC into Small Units and reduction of Govt Stake in insurance companies. Click here to read recommendations made by IIM Kozhikode.
With respect to the privatisation of IDBI Bank, he said that the government will also get financial bids for IDBI Bank this month. The Government is planning to privatise the bank by March 2026. IDBI Bank Staff have announced strike on 9th March against Privatisation of Bank.
Also Read: PNB Announces Senior Management Changes, New CGM appointed
| FDI* inflow in Public Sector Banks | |||||||
| Mar-20 | Mar-21 | Mar-22 | Mar-23 | Mar-24 | Mar-25 | ||
| S. No | Name of Bank | %holding | %holding | %holding | %holding | %holding | %holding |
| 1 | Bank of Baroda | 4.89% | 7.15% | 9.52% | 11.28% | 12.75% | 9.43% |
| 2 | Bank of India | 0.40% | 0.48% | 0.72% | 2.67% | 4.52% | 3.89% |
| 3 | Bank of Maharashtra | 0.20% | 0.16% | 0.27% | 0.39% | 1.25% | 1.93% |
| 4 | Canara Bank | 3.31% | 4.59% | 8.48% | 8.95% | 10.57% | 10.55% |
| 5 | Central Bank of India | 0.20% | 0.06% | 0.11% | 0.20% | 0.17% | 1.27% |
| 6 | Indian Bank | 2.74% | 1.02% | 1.73% | 4.17% | 5.29% | 4.74% |
| 7 | Indian Overseas Bank | 0.23% | 0.12% | 0.13% | 0.18% | 0.10% | 0.27% |
| 8 | Punjab and Sind Bank | 0.93% | 0.04% | 0.03% | 0.04% | 0.05% | 0.76% |
| 9 | Punjab National Bank | 2.30% | 3.09% | 1.56% | 1.88% | 4.97% | 5.85% |
| 10 | State Bank of India | 10.95% | 11.33% | 11.31% | 11.05% | 12.35% | 11.07% |
| 11 | UCO Bank | 0.14% | 0.13% | 0.03% | 0.11% | 0.06% | 0.06% |
| 12 | Union Bank of India | 1.34% | 0.73% | 1.30% | 1.78% | 7.07% | 7.48% |
