* NSE index up 0.08 pct, BSE index 0.08 pct higher

* Bank shares fall on profit booking

By Arnab Paul

Aug 24 (Reuters) - Indian shares inched up in thin trade on Thursday with gains in IT stocks such as Infosys Ltd offsetting losses in banking shares.

IT stocks were among the top gainers with Infosys rising as much as 2.4 percent after a group of institutional investors asked the company to bring former CEO Nandan Nilekani back on to its board to settle the feud with the founders.

Gains were however muted as investors booked profit in banking shares after a rally in the previous session following federal cabinet's approval of a mechanism to oversee consolidation in public sector banks.

Shares of state-run lenders Punjab National Bank and Allahabad Bank fell 1.5 percent and 1.8 percent, after gaining 3.4 percent and 4.7 percent in the previous session.

A stronger bank will not readily absorb a weaker one because it wouldn't want its balance sheet to weaken, said Saurabh Jain, assistant vice-president of research at SMC Global Securities.

"It is a difficult and a challenging process."

The broader NSE index was up 0.08 percent at 9,860.6 as of 0546 GMT, while the benchmark BSE index was 0.08 percent higher at 31,591.98.

Pharma stocks such as Sun Pharmaceuticals and Lupin gained over 2.5 percent each.

Shares of brewers surged after India's Supreme Court clarified that the liquor ban on highways did not apply to licensed establishments falling within municipal areas. United Spirits Ltd and Globus Spirits Ltd rose between 5 percent and 13 percent. (Reporting by Arnab Paul in Bengaluru; Editing by Vyas Mohan)