SBI and Other PSU Banks Stocks Surge on Potential FDI Limit Increase
Public sector bank (PSU) stocks experienced a notable rise of up to 3.3% following reports that the Indian government may increase the foreign direct investment (FDI) limit in state-run banks to 49%, more than doubling the current threshold. This anticipated move has generated significant excitement in the market. Here are the key highlights:
– Stock Performance:
– State Bank of India (SBI): Gained over 1%, reaching a peak of ₹936 per share.
– Bank of Baroda: Increased by 1%, hitting an intra-day high of ₹277.
– Canara Bank: Rose by over 2%, reaching ₹132 per share on the NSE.
– Indian Bank: Climbed by 3.3%, achieving a day high of ₹854.
– Union Bank of India: Increased by 2%, reaching ₹148 per share.
– Proposal Background:
– The finance ministry has been discussing this potential FDI increase with the Reserve Bank of India (RBI) for the past few months, although the proposal has yet to be finalized.
– The initiative aims to equalize regulations between government-owned and private banks, particularly as foreign ownership in private banks stands at 74%.
– Growing Foreign Investment:
– Recent investments include:
– Emirates NBD‘s ₹26,853 crore investment in RBL Bank, marking the largest-ever foreign investment in India’s financial services.
– Federal Bank‘s approval of a ₹6,196 crore issue for a Blackstone affiliate, allowing a potential 9.99% stake acquisition.
– Sumitomo Mitsui Banking Corporation‘s 24.2% stake acquisition in Yes Bank, worth nearly ₹15,000 crore.
– Non-Banking Financial Developments:
– Abu Dhabi’s International Holding Company pledged $1 billion for a 41% stake in Sammaan Capital, triggering a mandatory open offer.
– Reports also suggest Mitsubishi UFJ Financial Group (MUFG) is in talks to acquire a potential 20% stake in Shriram Finance for approximately $2.6 billion.
In conclusion, the anticipated increase in FDI limits for PSU banks not only promises to enhance foreign investment but also paves the way for a more competitive banking environment in India. Stakeholders remain optimistic about the future implications of this move for the banking sector.