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What is the story about?
Shares of India's state run lenders, led by Canara Bank and Punjab National Bank, declined up to 4% on Monday, December 8.
The Nifty PSU Bank index, which touched a recent high of 8,665.70 on November 26, is now down about 5.5% from those levels. Indian Bank is leading the decline, with the stock falling nearly 5% from its recent highs.
Indian Bank shares are currently down 3%, extending losses for a second straight session. The stock was also seen as a potential entrant into the Nifty Bank index, a move that did not materialise.
All constituents of the PSU Bank index are trading lower today.
Meanwhile, shares of Canara Bank, PNB, Bank of India, Union Bank, Bank of Maharashtra and others are down between 1.5% and 3.5%.
Nifty PSU Bank index performance (Nov 25 to Dec 8)
The slide comes after the Finance Ministry clarified its stance on increasing the foreign direct investment limit in the sector.
In a written reply in the Lok Sabha to MPs Ranjeet Ranjan and Haris Beeran, the Ministry addressed queries on whether the government plans to raise the FDI cap in PSU banks to 49%, the list of banks that would be affected, expected foreign inflows, and safeguards to prevent concentrated foreign ownership.
"No Sir. Under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/80 and the Foreign Exchange Management (Non Debt Instruments) Rules 2019, the FDI limit in PSBs and private sector banks stands at 20% and 74% respectively. In the private sector, up to 49% FDI is permitted under the automatic route, while investments between 49% and 74% require government approval. Further, under RBI’s master direction on acquisition and holding of shares or voting rights in banking companies, any share acquisition that results in a person owning or controlling 5% or more of a bank’s paid up capital requires prior RBI approval," the Ministry stated.
The Ministry also shared the latest foreign shareholding data for PSU banks. As of the March 2025 quarter, SBI had 11.07% foreign ownership, followed by Canara Bank at 10.55% and Bank of Baroda at 9.43%.
Last week, Mukul Kochhar told CNBC TV18 that PSU banks have been very attractive over the past few years and that the stocks could continue to re rate.
The Nifty PSU Bank index, which touched a recent high of 8,665.70 on November 26, is now down about 5.5% from those levels. Indian Bank is leading the decline, with the stock falling nearly 5% from its recent highs.
Indian Bank shares are currently down 3%, extending losses for a second straight session. The stock was also seen as a potential entrant into the Nifty Bank index, a move that did not materialise.
All constituents of the PSU Bank index are trading lower today.
Meanwhile, shares of Canara Bank, PNB, Bank of India, Union Bank, Bank of Maharashtra and others are down between 1.5% and 3.5%.
Nifty PSU Bank index performance (Nov 25 to Dec 8)
| Bank | Return |
|---|---|
| Bank of Baroda | -0.85% |
| State Bank of India | -2.63% |
| Union Bank of India | -2.79% |
| Canara Bank | -3.26% |
| Punjab National Bank | -4.46% |
| Indian Overseas Bank | -4.81% |
| Central Bank of India | -5.11% |
| Bank of Maharashtra | -5.62% |
| Bank of India | -5.81% |
| UCO Bank | -6.76% |
| Punjab & Sind Bank | -7.62% |
| Indian Bank | -10.08% |
The slide comes after the Finance Ministry clarified its stance on increasing the foreign direct investment limit in the sector.
In a written reply in the Lok Sabha to MPs Ranjeet Ranjan and Haris Beeran, the Ministry addressed queries on whether the government plans to raise the FDI cap in PSU banks to 49%, the list of banks that would be affected, expected foreign inflows, and safeguards to prevent concentrated foreign ownership.
"No Sir. Under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/80 and the Foreign Exchange Management (Non Debt Instruments) Rules 2019, the FDI limit in PSBs and private sector banks stands at 20% and 74% respectively. In the private sector, up to 49% FDI is permitted under the automatic route, while investments between 49% and 74% require government approval. Further, under RBI’s master direction on acquisition and holding of shares or voting rights in banking companies, any share acquisition that results in a person owning or controlling 5% or more of a bank’s paid up capital requires prior RBI approval," the Ministry stated.
The Ministry also shared the latest foreign shareholding data for PSU banks. As of the March 2025 quarter, SBI had 11.07% foreign ownership, followed by Canara Bank at 10.55% and Bank of Baroda at 9.43%.
Last week, Mukul Kochhar told CNBC TV18 that PSU banks have been very attractive over the past few years and that the stocks could continue to re rate.
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