New Delhi, June 18 -- The Union finance ministry may ask a new banking reforms committee to consider proposals to merge 12 state-run lenders into five and raise their foreign investment cap to 49%, three people aware of the discussions said.

The committee may be headed by former department of financial services (DFS) secretary M. Nagaraju, and a formal announcement on its composition and terms of reference is likely early next month, the people cited above said on the condition of anonymity.

"Discussions on the committee's terms have already been held with the Prime Minister's Office (PMO)," one of the three people said, adding that the proposal to consolidate PSBs is among them.

The Union budget for FY27 had proposed a committee to ch...