Banking stocks rally on buzz of allowing 100% FDI in banking

A security personnel stands guard in front of the gate of the State Bank of India (SBI) regional office in Kolkata May 23, 2014. SBI, the nation's top lender, reported its fifth consecutive quarter of declining profit as slower loan growth and a rise in bad loans take a toll on Indian lenders. REUTERS/Rupak de Chowdhuri (INDIA - Tags: BUSINESS) - GM1EA5N1D1Z01

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26 Aug, 2025 12:21

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Financial stocks rallied in early trade on Thursday as investors cheered the likelihood of introduction of FDI in banking.

Banking indices were up around 1-2 percent in the early trade, led by gains in Punjab National Bank, Federal Bank, State Bank of India and IDBI Bank, among others.

Frontline indices too clocked fresh record highs on the back of this rally.

The government is thinking of allowing 100 percent foreign direct investment in private banks, sources told CNBC-TV18.

Increasing the permissible limit for FDI in public sector banks to 49 percent from the current 20 percent is also being considered, the sources said.

The proposed changes are reportedly being discussed by the finance ministry, the Department of Industrial Policy and Promotion (DIPP) and the Indian Banks' Association (IBA).

At present, FDI of up to 49 percent is allowed in private banks without the permission of the government, and upto 74 percent can be invested with the government's approval.