The Indian government is reportedly planning to increase foreign institutional investors’ (FII) holding limit in public sector banks (PSBs) to comply by the capital requirements under the Basel III accord.
The move has been initiated following a growing interest among to own PSB shares among overseas investors expecting economic recovery, sources in the finance ministry and investment banking told Financial Express.
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Plans are on to increase the FII limit from the existing 20% to the 25-30% range.
The government also plans to make it uniform with private sector banks over a long period considering that larger PSBs need more equity and are facing ownership-cap issues compared with the smaller banks.
Banks may be offered the option to conduct a public issue to include retail investors, though it may lead to additional costs and discounts even after a 25-50% correction in share prices of some of the PSBs recently.
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By GlobalData
