According to multiple reports, the Finance Ministry has prepared a draft Cabinet note proposing an increase in the FDI limit in PSBs and has sought comments from other ministries on the proposed change. The Reserve Bank of India (RBI) has backed the proposal and recently wrote to the government recommending that an increase in the FDI limit be considered at the earliest, the reports said.
However, the proposal has not yet been officially announced by either the Finance Ministry or the RBI.
Currently, the FDI limit in private sector banks stands at 74 per cent, compared with just 20 per cent in public sector banks. Among the 12 PSBs, State Bank of India (SBI) has the highest foreign investment holding at 11.07 per cent, followed by Canara Bank at 10.55 per cent.
Meanwhile, foreign direct investment inflows into India increased by 6 per cent to .81 billion in the April-June quarter of the current financial year, compared with .62 billion in the corresponding quarter of 2025-26. The figures, released by the Department for Promotion of Industry and Internal Trade (DPIIT), indicate an increase in FDI inflows despite global uncertainties.
On a month-on-month basis, FDI inflows nearly doubled to .1 billion in April, compared with .6 billion in the same month last year. Inflows subsequently declined to .8 billion in May before recovering to .91 billion in June.
The services sector attracted the highest FDI inflows during the quarter at $7.04 billion. Computer software and hardware followed with $2.84 billion, while trading attracted $1.92 billion. Non-conventional energy received $1.24 billion, and the automobile sector recorded inflows of $622 million.
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Total FDI, including equity inflows, reinvested earnings and other capital, rose by about 22 per cent to $30.65 billion during April-June 2026-27.
Among the states and regions, Tamil Nadu attracted the highest FDI during the quarter at $5.95 billion. Maharashtra followed with $4.22 billion, while Delhi received $2.67 billion. Karnataka recorded inflows of $2.11 billion, followed by Gujarat at $1.3 billion.
The proposed increase in the foreign investment limit in public sector banks remains under consideration, with the Finance Ministry and the RBI yet to make an official announcement. If approved, the proposal would raise the permitted FDI ceiling in PSBs from 20 per cent to 49 per cent, while the latest DPIIT figures highlight the scale and distribution of foreign investment entering India.
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