FIPB to reconsider ICICI's insurance proposal on Aug 17

NEW DELHI: The Foreign Investment Promotion Board will consider again a proposal by ICICI Bank to divest 24 per cent stake in ICICI Financial Services, the bank's holding firm for insurance business, at its meeting on Friday.

The board will also take up Standard Chartered Bank's proposal to pick 49 per cent stake in UTI Securities from Securities Trading Corporation of India (STCI).

"ICICI Bank will present papers of approval given by insurance regulator IRDA to its proposal at the FIPB meeting on Friday which it did not submit earlier and we will reconsider the case," a Finance Ministry source told media.

FIPB had earlier rejected the bank's proposal on the ground that Section 2(g)(i) of IRDA regulations does not allow a subsidiary company to be a promoter of insurance business.

However, ICICI Bank is of the view it would continue to be the promoter of its insurance businesses, ICICI Prudential Life Insurance and ICICI Lombard General Insurance, despite transfer of shares from ICICI Bank to ICICI Financial Services and as such this does not flout any regulations.

ICICI Bank group head strategy and communication officer Kalpana Morparia had recently met Department of Economic Affairs secretary D Subbarao to put forward bank's views.

While IRDA has given its clearance over the issue that transfer of shares to ICICI Financial services, which has received commitments from foreign investors, would not breach the 26 per cent FDI cap, it had not taken up the issue of promoter company for insurance businesses. Stanchart Bank's proposal to buy 49 per cent stake in UTI Securities from STCI would also come up at the FIPB meeting.

In February 2006, STCI had bought 100 per cent stake in UTI Securities for Rs 265 crore from the Specified Undertaking of UTI. Through the deal, Stanchart will enter the retail stock broking business in the country. UTI Securities offers institutional, retail and online broking services.