FIPB may review ICICI holding co proposal

Three days after it rejected ICICI Bank's proposal to divest 24 per cent in ICICI Financial Services, the holding company for the bank's insurance joint ventures, the Foreign Investment Promotion Board is likely to review the case again after the bank submits a fresh application.

ICICI Bank Group Head Strategy and Communications Officer Kalpana Morparia today met Department of Economic Affairs Secretary D Subbarao, who heads the board.

When asked if there could be a rethink on ICICI Bank's proposal, a source said, "That option is always open."

The board had rejected ICICI Bank's proposal to divest 24 per cent stake in ICICI Financial Services in favour of foreign investors as a subsidiary could not take part in insurance business, the source said.

Regulation 2(g)(i) of the IRDA regulations said "Indian promoter" meant a company formed under the Companies Act, 1956 (1 of 1956), which was not a subsidiary as defined in section 4 of that Act, the source added.

The IRDA has backed ICICI Bank's proposal to set up a holding company for its insurance ventures, saying for all practical purposes the parent bank will remain the promoter of the insurance ventures.

Morparia is learnt to have carried to her meetings a certificate from the IRDA that the bank will continue to be the promoter of ICICI Prudential Life Insurance and ICICI Lombard General Insurance even with the existence of the holding company.

Additional reporting with Asit Ranjan Mishra & Prashant K Sahu