India is planning to allow direct foreign investment in state-run banks of up to 49%, more than double current limits, according to a person directly involved in the policy discussions.

The finance ministry has been discussing the matter with the Reserve Bank of India (RBI) , the country’s banking sector regulator, over the past couple of months, said the person, adding that the proposal has yet to be finalised.

Foreign interest in India’s banking industry is on the rise as evidenced by Dubai-based Emirates NBD’s recent $3 billion purchase of a 60% stake in RBL Bank and Sumitomo Mitsui Banking Corp’s $1.6 billion acquisition of a 20% stake in Yes Bank which the Japanese lender later raised by another 4.99%.

State-run banks are also seeing interest from overseas investors and raising

See Full Page