Govt actively conducting inter-ministerial discussions to enhance FDI in PSBs: Nagaraju ; NIFTY PSU Bank index up 2.7%

PSU Bank index jumped over 2% amid a broad-based recovery in the markets afterthe US announced reducing tariffs on India from 25% to 18%. Shares of State Bank of India were up by 3.6%, Indian Bank up 4.08%, Bank of Maharashtra up 4%, Bank of India up 4.19% on Tuesday afternoon. In addition to the broader market recovery, the shares were also trading higher after reports of a hike in the FDI limit in PSU banks came.

The NIFTY PSU Bank index fell by over 5% on Sunday after the budget failed to meet the hopes of restructuring in PSU Banks.

Financial Services Secretary M Nagaraju has said that the Finance Ministry is actively conducting inter-ministerial discussions to enhance foreign direct investment (FDI) in public sector banks (PSBs) from the current 20% to 49%, to strengthen their capital base.

Nagaraju said the FDI limit in PSBs and private sector banks is 20% and 74%, respectively. In the case of private sector banks, up to 49% of FDI is allowed through the automatic route, and beyond 49% and up to 74%, the government route is applicable. Even though the number of shares held by the union government in 12 PSBs has not declined since 2020, the respective percentage of its shareholding has declined in some of these banks due to the raising of capital through the issuance of fresh shares by banks.

He further said that all the PSBs put together have raised about ₹45,000 crore through various means, including qualified institutional placement (QIP) and offer for sale. He said banks would be mobilising about ₹45,000-50,000 crore in the next financial year as well, given their growth trajectory. Providing a growth outlook, he said, public sector banks are expected to double their asset size in the next five years. He said the decision was taken in consultation with the banks last year, and added that the combined assets of these banks were around ₹261 lakh crore at the end of September 2025.