The finance ministry and Reserve Bank of India have agreed to continue allowing 74% cap by foreign entities in Indian banks.

RBI had proposed this year that the foreign holding in banks should be brought down to 50% from the existing 74% in order to reduce foreign ownership in banks.

Department of Economic Affairs (DEA) however said, "It would be inconsistent with the overall tenor of liberalisation, which is to move in a liberal and minimal interventionist direction."

In a recently held meeting by the finance ministry, DEA suggested that the 74% cap should be continued but along with it a special route should be carved out for important operations like corporate debt restructuring and treasury operations.

RBI agreed to the proposal by DEA. The Department of Financial Services would take into consideration proposals by both RBI and DEA.