The government is reportedly planning to allow direct foreign investment in state-run banks of up to 49 per cent, a move that would more than double the current cap. According to a report in Reuters that quoted individuals with direct knowledge of the policy discussions, the finance ministry has been engaged in talks with the Reserve Bank of India (RBI) over several months, but the proposal is yet to be finalised. Advertisement

The initiative is viewed as a strategy to attract more overseas capital and strengthen public sector banks in response to growing demand for credit and increased foreign interest in India’s financial sector.

Foreign interest in India’s banking industry has grown, illustrated by recent large transactions such as Emirates NBD’s $3 billion acquisition of a 60 per c

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