No proposal to hike FDI cap in PSBs, clarifies Govt

"There is no such proposal for relaxing Foreign direct investment limit (in public sector banks)," Garg said in an interview.

Currently, 20 per cent foreign investment is permitted in PSU banks under government approval route.

However, the same is 74 per cent for private sector banks provided there is no change of control and management of the investee company.

When asked if the government is considering any proposal for privatising state-owned banks, Garg said: "I don't think there is any proposal for privatisation of any bank."

According to experts, increase in foreign investment would result in flow of capital which PSU banks require urgently. The government can provide limited support to these banks as the resources are limited. Last year, the government announced an aggressive Rs 2.11 lakh crore capital infusion for the NPA-hit public sector banks (PSBs) over a period of two years.

Out of this, the government has already infused Rs 88,139 crore in 20 public sector banks in 2017-18, with IDBI Bank getting the most - Rs 10,610 crore.

While State Bank of India got Rs 8,800 crore, Bank of India received Rs 9,232 crore.

UCO Bank received Rs 6,507 crore; Punjab National Bank - Rs 5,473 crore; Bank of Baroda - Rs 5,375 crore; Central Bank of India - Rs 5,158 crore; Canara Bank - Rs 4,865 crore; Indian Overseas Bank - Rs 4,694 crore and Union Bank of India - Rs 4,524 crore.

Non-performing Assets (NPAs) of public sector banks have increased to Rs 8.31 lakh crore as of December 2017, from Rs 2.78 lakh crore in March 2015.

In the last three-and-a-half years, the government pumped in more than Rs 51,000 crore capital in PSBs.