The controversial issue of private banks, including ICICI Bank, becoming 'foreign' following fresh FDI guidelines, has been tossed back to the court of the Finance Ministry and Reserve Bank of India (RBI).
The Department of Industrial Policy and Promotion (DIPP) has sought advice from the RBI as also the Finance Ministry on the letter it received from the ICICI Bank, which asked for clarification on the impact of the new FDI rules.
With the changes in the FDI rules through a string of 'press notes', several private sector banks found that their status would change from 'resident' to 'non-resident' (foreign).
This is so because the total FDI will take into account the stakes held by foreign institutional investors, non-resident Indians, American and global depository receipts, foreign currency convertible bonds and convertible preference shares.
The DIPP wants an early view on the issue as it finds that seven private sector banks that have overseas holdings of over 50 per cent in different forms would be now be considered 'foreign'.
However, ICICI Bank Joint Managing Director Chanda Kochhar had said, "Nothing has changed in the ownership to make it a foreign-owned bank."
Since change in status for ICICI Bank and six others like HDFC Bank, ING Vysya Bank, Yes Bank, Development Credit Bank, IndusInd Bank and Federal Bank could have implications for their investment in sectors such as insurance, the government may exempt them from the new rules.
The DIPP feels even though these banks could be "owned" by foreign investors, they are largely "controlled" by Indians from the board level downwards.
