The government may agree to increase the cap on FII investments in public sector banks. Currently there is a cap of 20% on such investments and the proposal is to increase it to 49%. This may help the banks to overcome the current impasse as a result of their reporting sharp increase in their NPAs. At present, a single non-banking institution can hold not more than 10% in a bank while one bank can hold maximum 5% stake in another bank. These stipulations would continue, according to news reports in this regard. The government had estimated around Rs 2.8 crore as the requirement for capital infusion in the public sector banks by 2018.
