New Delhi: The Finance Ministry is looking at enhancing foreign direct investment in public sector banks to 49 percent from the current 20 percent to strengthen their capital base.
"We are still considering, and inter-ministerial consultation is on for raising FDI cap to 49 percent," Financial Services Secretary M Nagaraju said.
The FDI limit in public sector banks (PSBs) and private sector banks is 20 percent and 74 percent, respectively.
In case of private sector banks, up to 49 percent of FDI is allowed through the automatic route, and beyond 49 percent and up to 74 percent, the government route is applicable.
The holding of the number of shares of the Union Government in 12 PSBs has not declined since 2020.
Even though the number of shares held by the union government has not declined, 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.
Nagaraju further said that all the PSBs put together have raised about Rs 45,000 crore through various means, including qualified institutional placement (QIP) and offer for sale.
Banks would be mobilising about Rs 45,000-50,000 crore in the next financial year as well, given their growth trajectory.
Providing an outlook for growth, he said, public sector banks are expected to double their asset size in the next five years.
The decision was taken in consultation with the banks last year, he said, adding that the combined assets of these banks were around Rs 261 lakh crore at the end of September 2025.
About the IDBI Bank strategic sale, the secretary said financial bids would be invited during this month or next month.
In October 2022, the government, together with LIC, had invited EoI (Expression of Interest) from investors for privatising IDBI Bank by selling a total of 60.72 percent stake. This includes a 30.48 percent stake of the central government and 30.24 percent of LIC.
DIPAM, in January 2023, received multiple EoIs for IDBI Bank. The prospective buyers of IDBI Bank have already been granted security clearance by the Ministry of Home Affairs and declared fit and proper after evaluation by the Reserve Bank of India.
As regards big banks, Nagaraju said the Indian economy would need 3-4 big lenders.
"We need 3-4 big banks for a country of our size," he said.
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