The Hindu Business Line : ICICI Bank gets FIPB nod to sell 24% in arm

New Delhi, Aug. 17 ICICI Bank’s proposal to sell 24 per cent equity in its wholly owned subsidiary, ICICI Financial Services Ltd, has, according to sources, cleared a legal hurdle with the Foreign Investment Promotion Board (FIPB) today deciding to recommend the proposal to the Finance Minister, Mr P. Chidambaram, for final approval.

Initial rejection

This proposal had earlier been rejected by FIPB as ICICI Financial Services was the holding company for ICICI’s insurance and asset management businesses.

ICICI Bank’s board had, in March this year, approved a proposal to set up a fully owned subsidiary and transfer to the entity its investments in the insurance and asset management subsidiaries.

Violation?

After considering the step-down structure and taking account of the foreign holding in ICICI Bank, it was contended earlier by certain regulatory authorities that the 24 per cent stake sale in ICICI Financial Services may violate the 26 per cent foreign direct investment (FDI) cap set for the insurance sector in the country.

It was also earlier held that a promoter of an insurance venture cannot be a subsidiary and ICICI Financial Services cannot, therefore, be the holding company of the insurance business.

FDI in DSE

Meanwhile, sources said that FIPB today cleared four foreign investment proposals for picking up in aggregate 20 per cent stake in the Delhi Stock Exchange, one of the oldest stock exchanges in the country.

These proposals would cumulatively result in FDI of about Rs 42 crore.

The four proposals are from Noor Investments, Wilmette, Ikarus Petroleum Projects Ltd and Kuwait Holding Privatisation Ltd.

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ICICI to sell 5.9% in new arm for Rs 2,650 cr
ICICI Bank to set up new arm for insurance, MF biz

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