New Delhi: The government is not considering any merger or consolidation of Public Sector Banks (PSBs) at present, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha on 1 December.
“Presently, no proposal on merger or consolidation of Public Sector Banks is under consideration of the Government,” he said in a written reply.
Responding to a separate query, Chaudhary outlined the Foreign Direct Investment (FDI) limits applicable to the banking sector. As per the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, the FDI cap for PSBs is 20 per cent, while private sector banks can receive up to 74 per cent foreign investment.
He said FDI plays a significant role in boosting economic development by encouraging technology transfers, strengthening strategic sectors, enhancing competition and innovation, and supporting job creation.
On IDBI Bank’s strategic disinvestment, the minister reiterated that the process will follow the approval granted by the Cabinet Committee on Economic Affairs (CCEA). In May 2021, the CCEA provided ‘in principle’ approval for the government and Life Insurance Corporation of India (LIC) to reduce their shareholding, along with a transfer of management control. A total of 60.72 per cent equity in IDBI Bank is being offered – 30.48 per cent by the government and 30.24 per cent by LIC.
Post-disinvestment, the government and LIC will retain 15 per cent and 19 per cent equity, respectively. As of March 2025, the bank had outstanding capital and liabilities of about Rs 4.11 lakh crore, backed by assets of an equivalent amount.
Chaudhary also reported an improvement in the financial performance of Regional Rural Banks (RRBs). They recorded their highest-ever consolidated net profit of Rs 7,571 crore in FY24, followed by Rs 6,825 crore in FY25. He noted that despite earlier declines due to retrospective pension liabilities and computer increment payments, key metrics, including CRAR, deposits, advances, NPAs, and CD ratio, have shown consistent progress.
