Singapore pushes for higher Temasek stake in ICICI Bank

NEW DELHI: Singapore has urged India to take a relook at its decision of not allowing Temasek Holdings — the company which owns and manages the Singapore government’s direct investments—to increase its stake in ICICI Bank.

The matter was taken up at a recent review meeting of the India-Singapore comprehensive economic cooperation agreement (CECA) in New Delhi, where Indian negotiators asked for a speedy resolution of the issue of granting qualified full banking status to State Bank of India (SBI) in Singapore.

Official sources told ET that India made it clear that it was not possible for the commerce ministry to go against the Reserve Bank of India (RBI) guidelines which state that the combined holding of an investor, and entities related to it, in a private bank should not exceed 10%. Since Temasek and GIC (the Government of Singapore Investment Corporation), both belong to the Singapore government and their present combined stake in ICICI is close to 10%, an increase in stake by either in ICICI will take up total ownership beyond 10%.

In the review meeting held last Saturday, the Singapore side continued to argue that the two entities did not act in concert and had different mandates. India, however, refused to see it that way.

India, on its part, asked Singapore to expedite changes in its regulations to allow State Bank of India (SBI) QFB status in the country. As per the CECA, both the countries would allow three banks from the other country QFB status. QFB status allows a bank to have 15 branches and provide other facilities such as ATMs.

While Singapore banks qualify for QFB status in India, Indian banks including SBI, do not qualify as Singapore’s standards are very stringent. Singapore has been asked to prepare grounds for granting QFB status at least for SBI. India, meanwhile, has not given QFB status to Singapore banks in a bid to push the country to amend rules for Indian banks fast.The CECA between India and Singapore was implemented in August last year.