India Considers Raising Foreign Investment Cap in State-Owned Banks

India is contemplating increasing the foreign direct investment (FDI) limit in its state-owned banks to 49%, according to external media reports. According to Jin10, policymakers aim to bolster economic growth by enhancing the capital of these banks without relinquishing full control. On Monday, Federal Bank Secretary Nagaraju stated that the government is discussing raising the FDI cap from the current 20% to 49%. Currently, foreign ownership in 12 state-owned banks, including the largest, the Reserve Bank of India, is restricted to under 20%. This historical limitation was established to maintain strategic control over the financial system. The proposed cap is significantly lower than the 74% foreign access allowed in private banks and the 100% FDI limit for local insurance companies.