New Delhi, Feb. 2 -- The government may consider hiking the foreign direct investment (FDI) limit in public sector banks from 20% to as high as 49% after conducting a review of foreign direct holdings in these banks, a senior government official said on Friday. The goal is to attract foreign investors to Indian banks while raising their capital base and creating more big banks in the process, the official added.

After the finance minister's Budget speech on Sunday, department of financial services secretary M Nagaraju said the finance ministry was still considering raising the FDI limit in PSBs to 49% and that inter-ministerial consultations were being held on the issue.

"What should be the level of FDI in PSBs is still under considerat...