The Foreign Investment Promotion Board (FIPB) on Friday cleared a proposal by ICICI Bank Ltd to divest 24% stake in ICICI Financial Services Ltd, the bank’s holding firm for insurance business, to foreign players.
The proposal now goes to finance minister P. Chidambaram for final approval.
ICICI Bank, India’s largest private sector bank, will have to receive a nod from the Reserve Bank of India before it can sell the stake.
FIPB earlier had rejected the bank’s proposal on grounds that Insurance Regulatory and Development Authority (Irda) regulations do not allow a subsidiary company to be a promoter of insurance business.
But ICICI Bank says it would continue to be the promoter of its insurance businesses—ICICI Prudential Life Insurance and ICICI Lombard General Insurance—despite transfer of shares from ICICI Bank to ICICI Financial Services. The bank says there are no violation of regulations.
Kalpana Morparia, ICICI Bank group head (strategy) and communication officer, had recently met with D. Subbarao, secretary at the department of economic affairs, to put forward the bank’s views.
Firms such as Goldman SachsGroup Inc., General Atlantic Llc., Government of Singapore Investment Corp., Temasek, the Singapore government’s investment arm, and Crown Capital Llc. hadexpressed interest in buying stake in ICICI Financial Services.
Last time, the bank had not submitted the necessary papers in connection with Irda’s approval of its proposal.
FIPB reconsidered the proposal after ICICI Bank submitted the paperwork, sources close to the development said.