PSU Banks: Is the FDI limit being considered to be increased to 49%? The government has responded.

News Topical, Digital Desk : The government today clarified its position on FDI regulations in public sector banks. In response to a question regarding FDI in banks, the government stated that it is not considering any proposal to increase the FDI limit in public sector banks. Minister of State for Finance Pankaj Chaudhary provided this information in response to a question in the Rajya Sabha. The government also provided information on the level of FDI in public sector banks since 2020.

What the Minister of State for Finance said:

A total of four questions were asked of the government regarding the status of FDI in banks, the government's consideration of any proposal to increase the limit, and the impact of FDI on banks and their operations. The Minister of State for Finance stated that no proposal to increase the FDI limit in public sector banks is being considered. The FDI limit in public sector banks is 20% and in private banks it is 74%. In private banks, FDI up to 49% can be allowed through the automatic route, and from 49 to 74% can be allowed through the government. Regarding the impact of this investment on bank control, the Union Minister stated that according to Reserve Bank regulations, RBI approval is required for acquiring a stake of more than 5% in a bank. 

What is the status of FDI in public sector banks? According to the information given by the government, FDI holding (this includes FPI, FII, NRI and OCB holdings) in two public sector banks, State Bank of India and Canara Bank, is more than 10%. Whereas in the list of 12 banks given, FDI in none of the banks is more than 12%. Out of these 12 banks, FDI holding level has increased in 6 compared to last year. Whereas in 5 it has decreased and in one the level has remained stable. There has been a decline in FDI holding in SBI, Bank of Baroda, Union Bank, Bank of India and Indian Bank. Whereas there has been an increase in PNB and Punjab & Sind Bank.

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