M Nagaraju, Secretary, Ministry of Financial Services
The Union government’s shareholdings in 12 public sector banks (PSBs) have not declined since 2020. But the percentage of its shareholdings in some of these banks has decreased as a result of the issuance of new shares to raise capital.
“We are still considering, and inter-ministerial consultations are underway, to increase the FDI ceiling to 49 percent,” Financial Services Minister M. Nagaraju said.
Additional capital
He also said: “The credit ratio needs to increase from 56 per cent now to 150 per cent. We need to look at whether we need to have additional capital or use existing capital more effectively, or whether we need to look at the capital adequacy ratio. All this requires a calibrated approach.”
The government allows up to 49 percent of foreign direct investment in private banks through automatic means, while approval is required for foreign investments above 49 percent and up to 74 percent. There will also be a 15 percent cap on any foreign institution in Indian banks unless the RBI relaxes it.
He also said that the Indian economy would need three to four big banks as only SBI and HDFC Bank are among the top 100 lenders in the world. He admitted that most Indian banks do not have the financial capacity to lend large amounts, but he said larger banks will be able to take on bigger risks and make bigger loans. “No bank can do that alone now,” he said.
On the strategic sale of IDBI Bank, he said financial bids would be floated this month or next month. The government owns 45.48 percent of IDBI Bank, while LIC owns 49.24 percent. Both LIC and the government can jointly sell 60.7 percent stake in IDBI Bank.
Nagaraju also said that PSB’s will launch qualified institutional placement (QIP) of equity worth around ₹500 billion.
Published on February 2, 2026
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