Kamath may return to Prudential ICICI AMC board

ICICI Bank MD and CEO K V Kamath is likely to rejoin the Prudential ICICI Asset Management Company board.

The move has been facilitated by ICICI Bank and increases its stake in the mutual fund joint venture from 45 per cent to 51 per cent, thereby making it a subsidiary.

Kamath stepped down from the board three years ago when the erstwhile ICICI went for a reverse merger with its banking arm "" ICICI Bank.

The Reserve Bank of India (RBI) norms stipulate that bank directors cannot be on the board of a non-subsidiary. As ICICI Bank was holding less than 51 per cent it the mutual fund, technically it was not its subsidiary.

The bank's foreign partner, Prudential Plc, has been keen for sometime now that Kamath be inducted on the board. Discussions between the two have been on for over a year, said sources close to the development.

ICICI Bank officials, however, said that it cannot make any forward looking statements. Last Friday, ICICI Bank upped its holding by 6 per cent in the AMC for around Rs 60-65 crore. The mutual fund arm has assets under management to the tune of Rs 16,000-crore.

The dilution of Prudential's holding also comes at a time when the government proposes to raise FDI cap in the insurance sector to 49 per cent from the prevailing 26 per cent.

The move by ICICI Bank of increasing its stake in the AMC will help in the alignment of interest of the two shareholders when regulations allow Prudential to up its stake in the insurance entity, said sources.

This would ensure that when the pension sector is opened to private players, the joint venture partners would be indifferent as to which entity (AMC or life insurance company) bids for the pension foray, they added.