Indian Bank shares down by more than 6% after government rules out increasing FDI limit in PSU banks

Indian Bank shares are down by more than 6% today. At 12:35 p.m. IST, 3^rd December, 2025, its stock price is down by 6.32%, trading at Rs 805.15. Nifty 50 index is down by 0.40% at this time.

Indian Bank shares are declining today, along with the stocks of other public sector banks. This after the government informed the Parliament yesterday that currently it is not considering any proposal to raise Foreign Direct Investment (FDI) limit in public sector banks.

FDI limit in PSU banks is currently at 20%

Under the prevailing rules, FDI of up to 20% stake is allowed in public sector banks. For private banks, this limit is 74%. Increasing FDI limit in public sector banks would increase their capitalization. This in turn would give them more capital to lend and expand their business. It may result in higher growth for these banks. Therefore, markets are showing disappointment today after the government’s statement.

FDI in Indian Bank currently is at 4.74%. SBI has the highest FDI currently, among public sector banks. Foreign Direct Investment in it is more than 10%.

Indian Bank stock is among the best performing stocks in 2025

Indian Bank’s stock is among the best performing stocks in 2025. Year-to-date in 2025, its shares have gained 55.74%. Nifty 50 index has gained 9.20% in this period. Indian Bank’s shares have outperformed the Nifty 50 index by around 46% this year. Nifty PSU Bank index has gained 30.18% year-to-date (YTD) in 2025. Indian Bank’s shares have outperformed the Nifty PSU Bank index by more than 15% this year. Indian Bank’s stock currently has 8.37% weight in Nifty PSU Bank index.

Indian Bank’s shares rose more steeply after the company reported its September quarter result. Its net profit in the September quarter increased year-on-year (Y-o-Y) by 11.5%.  The stock is currently trading at 12-month trailing price-to-earnings (P/E) ratio of 9.62. Average P/E ratio at which Nifty PSU bank index is trading currently is 8.71.

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Source: NSE, Indian Bank