India is considering increasing the limit on direct foreign investment in state-run banks to as much as 49%, more than double the current ceiling of 20%, Reuters reported, citing a person directly involved in policy discussions.

The finance ministry has been in talks with the Reserve Bank of India over the proposal for the past two months, the person said, noting that the plan remains under deliberation. A second source confirmed the discussions, adding that the move is aimed at narrowing the regulatory gap with private banks, where foreign ownership of up to 74% is permitted.

Foreign interest in India’s banking sector has risen sharply, highlighted by Emirates NBD’s recent $3 billion deal to acquire 60% of RBL Bank and Sumitomo Mitsui Banking Corp’s $1.6 billion investment in Yes Bank,

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