Indian government mulls raising foreign investment limit in PSBs

Business Oct 27, 2025

The Indian government is thinking about letting foreign investors own up to 49% of public sector banks (PSBs), a big jump from the current 20%.
This would bring PSBs closer to private banks, where foreign ownership can go as high as 74%.
The proposal is still being discussed with the Reserve Bank of India.

Proposal still being discussed with RBI

If this goes through, PSBs could get a much-needed boost—more global money, less pressure on government funds, and access to international expertise.
The government still plans to keep majority control and might cap voting rights for individual investors at 10%.
After the news broke, PSU bank stocks surged, showing that investors are optimistic about these changes making public banks stronger and more competitive.