Govt May Raise FDI Cap In PSBs To 49% — What It Means For Investors And Foreign Inflows

Shares of government-owned banks are in focus today amid reports that the Centre may soon revise FDI limits for public sector banks. Currently, foreign direct investment is capped at 20%, but reports suggest the government could raise this to 49% — a move aimed at helping recapitalise PSBs and align them more closely with private banks, where up to 74% foreign ownership is allowed. However, foreign investor interest remains modest for now, with Canara Bank having the highest FII holding at just under 12%, SBI below 10%, and most other listed PSBs under 5%. Will a higher FDI limit change the game for state-run lenders?