The government is examining a proposal to raise the 20 per cent ceiling on foreign fund holdings in State Bank of India, the bank's chief said on Wednesday.

"I do not know when they will take a decision," A K Purwar told reporters, when asked if he expected the government to take a decision by the time of the annual Budget at month-end.

"The proposal is with the government. They are examining it."

SBI, India's largest commercial bank with more than three trillion rupees in assets, is governed by a separate legislation.

The remaining 19 state-run banks are under the Banking Regulation Act, which allows foreign funds to hold up to 24 per cent.

The respective caps include foreign direct investments and foreign portfolio or fund investments.

The government holds majority stakes in the 19 state-run banks while the Reserve Bank of India owns nearly 60 per cent in SBI.

SBI controls seven associate banks.

Speculation over a hike in the foreign fund limit has been brewing for several months.   Shares in SBI, which has about 9,000 branches across the country, were up 2.2 per cent at Rs 300.75 in the afternoon, while the Bombay Stock Exchange's top-30 share index was down 0.76 per cent.