2025.10.2802:19:09UTC+00India Plans to Raise Foreign Investment Limit in State Banks to 49%

India is contemplating an increase in the permitted level of direct foreign investment in state-run banks, aiming to raise it up to 49%. This adjustment represents a significant increase beyond the current restrictions. A source with direct involvement in the policy deliberations shared this information with Reuters, emphasizing that the proposal is still under review and has not yet reached a final decision. Over recent months, the finance ministry has engaged in discussions with the Reserve Bank of India (RBI), the nation's banking sector authority, regarding this potential policy shift. The interest among foreign investors in India's banking sector has been increasing, highlighted by key transactions such as Emirates NBD from Dubai acquiring a 60% stake in RBL Bank for $3 billion, and Sumitomo Mitsui Banking Corp's $1.6 billion investment, securing a 20% stake in Yes Bank, which was later expanded by an additional 4.99%. The prospect of increased foreign ownership limits is also appealing to investors interested in state-run banks, potentially facilitating increased capital acquisition for these institutions in the near future, as noted by the source.