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Bloomberg
Indian bank shares surged the most since November on a report the government is considering allowing foreign investors to own larger stakes in the country’s lenders.
The Bankex Index, a gauge for 10 lenders, rose 2 percent to a new record high as of 9:30 a.m. in Mumbai. Gains were led by privately owned Yes Bank Ltd., which is due to report earnings later in the day, followed by state-run Punjab National Bank and State Bank of India, the nation’s largest lender.
Prime Minister Narendra Modi’s administration is holding talks to raise the foreign investment limit in private sector banks to 100 percent from 74 percent and in state-run banks to 49 percent from 20 percent, the Business Standard newspaper reported citing a government official it didn’t identify. Foreign investment includes foreign direct investment and overseas
portfolio investment through various routes.
A higher cap would make it easier for banks to meet capital requirements under global Basel regulatory standards. However, the report cited the unnamed official as saying the banking regulator may have some objections to the move, and Rajiv Kumar, secretary in the government’s Department of Financial Services, didn’t
reply to the newspaper’s request for comment.
This isn’t the first time the issue has been discussed: the government was mulling increasing the maximum amount foreign investors can hold in state-run lenders, people familiar with the
matter had told Bloomberg News in 2015.