ICICI is ready to bite the bullet. It is moving a resolution at its board meeting on October 25 seeking consent for merging ICICI with ICICI Bank. Through the reverse merger, ICICI will turn into a universal bank.
Even though senior ICICI executives refused to comment, sources familiar with the development said the blueprint for the migration path was ready and it could formally approach the Reserve Bank of India after the board cleared the proposal.
ICICI managing director and CEO KV Kamath met RBI governor Bimal Jalan today to formally appraise him of the plan. ICICI had made a formal presention to the RBI last October on its plan to become a universal bank. But the RBI was not willing to clear the proposal at that stage. This time, however, the proposal is likely to go through as the finance ministry backing it to the hilt.
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The RBI is in favour of a graded transition of the financial institution to a bank. The central bank wants ICICI to adhere to small doses of statutory liquidity ratio (SLR), cash reserve ratio (CRR) and priority sector stipulations on its existing liabilities and assets to be eligible to have restricted access to demand deposits on the course to become a full-fledged bank. The process can be widened progressively with the institution fulfilling the norms fully within a timeframe.
In its presentation to the central bank, ICICI had laid down a seven-year roadmap to comply with all statutory requirements of turning itself into a bank. It wanted to become a bank through a reverse merger with ICICI Bank and said it would adhere to all the statutory norms on the incremental assets and liabilities.
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