The Nifty PSU Bank index slipped 3.04% to 8,255.75, reflecting broad weakness across the pack.
Indian Bank led the fall with a 6.14% drop, followed by Punjab National Bank falling 4.35% and Canara Bank declining 4.10%. Bank of India lost 3.69%, while Bank of Baroda was down 3.07% and Union Bank of India weakened 2.70%. Central Bank of India shed 2.65%, Punjab and Sind Bank slipped 2.40% and UCO Bank eased 2.12%. State Bank of India dipped 1.47%, Bank of Maharashtra was lower by 1.46% and Indian Overseas Bank slipped 1.14%.
The sell-off followed a written reply in the Lok Sabha to questions raised by MPs Ranjeet Ranjan and Haris Beeran on whether the Centre plans to lift the FDI cap in PSU banks to 49%. The lawmakers had also sought details on potential beneficiaries, expected foreign inflows and safeguards to prevent concentrated foreign ownership.
The Finance Ministry said no such proposal is under consideration. It reiterated that the existing framework under the Banking Companies Acquisition and Transfer of Undertakings Act of 1970 and 1980 and the Foreign Exchange Management Non-Debt Instruments Rules of 2019 sets the FDI limit at 20% for public sector banks and 74% for private lenders. Of this, FDI up to 49% in private banks is permitted through the automatic route, while investments between 49% and 74% require government approval.
The Ministry also highlighted RBI norms requiring prior approval for any acquisition which results in an investor holding 5% or more of a bank’s paid-up capital or voting rights. The clarification cooled recent speculation around a possible liberalisation of investment norms in the sector and triggered profit-taking across several PSU bank counters.