The government is working out the modalities for enhancing foreign direct investment limit to at least 74 per cent in banks and assured it would have no impact on ownership control and regulation of the public sector banks.

"Government has taken an in-principle decision to enhance FDI limit in banking companies to facilitate setting up of subsidiaries by foreign banks and to invite investment in private sector banks," Minister of State for Finance Anandrao V Adsul informed Lok Sabha on Friday.

"Modalities for implementing the decision are being worked out and executive instructions are expected to be issued thereafter," he said.

On the proposed initial public offer of PSU banks, he said, "Government has received request from Bank of Maharahstra, Dena Bank and Punjab & Sind Bank for public offer."

In the last three years, eight banks have raised funds from the capital market and all their issues were over-subscribed, he said.

The banks, which went for public offer are Andhra Bank, PNB, Union Bank of India, Canara Bank, Allahabad Bank, UCO Bank, Indian Overseas Bank and Vijaya Bank.

In view of the good performance of PSU banks, Adsul said they have been asked to consider payment of interim dividend on or before finalisation of accounts for the third quarter.