Government on Monday sought parliamentary approval to cut its stake in top lender State

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Bank of India to 51 percent from 55 percent, seeking to raise $1.2 billion at current market prices from the key reform move.

The central government had earlier said it would move to cut its holdings in state-run banks while retaining majority control, but has faced political and union opposition.

The government owns 59.41 percent of State Bank of India (SBI) and already has lawmakers' approval to trim it to 55 percent.

On Monday, Finance Minister Pranab Mukherjee introduced in parliament a bill seeking approval for SBI to raise capital by a public issue or private placement of shares or through a rights issue.

SBI shares were up 2.5 percent at Rs 2,096 by 1:12 p.m., outpacing the 1 percent rise in the broader market and the 1.25 percent rise in the bank index.