Foreign Vote Cap May Stay at Public Banks

The Centre may keep voting rights of investors in public-sector banks unchanged at 10% even as it engages the Reserve Bank of India (RBI) to review foreign investment limits in these banks to bring in more capital, two persons aware of the matter said.

- Subhash Narayan

The government is mandated to hold a 51% stake in PSBs, with foreign investment capped at 20%. But irrespective of how much an individual or institution holds in a PSB, their voting rights are capped at 10%.

"The voting rights in PSBs may remain at 10% even if the government and regulators decide to raise foreign investment limits beyond 20%. This would retain the government character of these banks, as with limited voting rights, private and foreign investors would not be in a position to impact the management and decision-making powers of bank boards," said the first person cited above.