Indian Bank, PNB, BoI: PSU bank stocks decline up to 6% as Centre denies proposal to hike FDI limit; NIFTY PSU Bank down 2.5%
FDI limit in PSBs: The FDI limit in PSBs and private sector banks is 20% and 74%, respectively. In the case of private sector banks, up to 49% of FDI is through the automatic route, and beyond 49% and up to 74%, the government route is applicable.
The NIFTY PSU Bank index was trading over 2.5% lower at 8,296.45 levels, with all 12 components trading in negative territory.
The top loser was Indian Bank (down 5.67%), followed by Punjab National Bank (down nearly 4%) and Bank of India (down over 3%).
The FDI limit in PSBs and private sector banks is 20% and 74%, respectively. In the case of private sector banks, up to 49% of FDI is through the automatic route, and beyond 49% and up to 74%, the government route is applicable.
In response to a written question in the Rajya Sabha on whether the government has proposed raising the FDI limit in PSBs to 49%, Chaudhary replied in the negative.
Further, as per the Reserve Bank of India's (RBI) Master Directions on ‘Acquisition and holding of shares or voting rights in Banking Companies’, share acquisition of a bank resulting in any person owning or controlling 5% or more of the paid-up capital of the bank requires prior RBI approval.
Replying to another question, Chaudhary said the holding of the number of shares of the Union Government in 12 public sector banks (PSBs) has not declined since 2020.
However, Chaudhary said, even though the number of shares held by the Union Government has not declined, the respective percentage of shareholding of the Union Government has declined in some of these banks due to the raising of capital through the issuance of fresh shares by banks.
Fresh capital is raised by the banks to meet their capital requirement for business growth and maintaining regulatory requirements, he said, adding, such capital raising reduces the fiscal burden on the government and strengthens the balance sheet of banks.
Banks are also required to ensure compliance with the minimum public shareholding requirement of 25% under Rule 19A of the Securities Contracts (Regulation) Rules, 1957, and Regulation 38 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Chaudhary said.
As per the New PSE policy for Atmanirbhar Bharat issued by the DIPAM, Chaudhary said, "Recommendations shall be made by NITI Aayog with regard to Central PSEs under strategic sectors, which includes the Banking, Insurance and Financial Services Sector, and recommendations shall be considered, and Central PSEs to be, inter alia, retained under government control or considered for privatisation or merger or subsidiarisation with another PSE shall be approved by an alternative mechanism that has been approved by the government."
It is pertinent to mention that the ease of access to banking services in rural and semi-urban areas has been strengthened by ensuring that each of the inhabited villages in the country is covered by a banking outlet (bank branch/BC/IPPB) within a radius of 5 kilometres, he said.
How public sector banks in the Q2 FY26 earnings
State Bank of India-led public sector banks posted a record cumulative profit of ₹49,456 crore in the second quarter of the current fiscal year (Q2 FY26), reflecting a 9% year-on-year (YoY) growth despite two lenders reporting a decline.
All 12 public sector banks (PSBs) together made a profit of ₹45,547 crore in the September quarter of FY25. Thus, the increase in profit in absolute terms was ₹3,909 crore as compared to the same quarter of the previous financial year.
Market leader SBI alone contributed 40% to the total earnings of ₹49,456 crore, as per the published numbers on stock exchanges.
SBI logged a net profit of ₹20,160 crore in Q2 FY26, 10% higher than the same period of the previous fiscal.
With inputs from PTI
