India is planning to allow direct foreign investment in state-run banks of up to 49%, more than double the current limit, a person directly involved in the policy discussions told Reuters. The finance ministry has been consulting with the Reserve Bank of India (RBI), the country’s banking sector regulator, over the past few months, the person added, noting that the proposal has not yet been finalized. Foreign interest in India’s banking industry is rising, as seen in Dubai-based Emirates NBD’s recent $3 billion purchase of a 60% stake in RBL Bank and Sumitomo Mitsui Banking Corp’s $1.6 billion acquisition of a 20% stake in Yes Bank, which the Japanese lender later increased by another 4.99%. State-run banks are also attracting interest from overseas investors, and raising the foreign ownership limit would help them secure more capital in the coming years, the person said.
