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The Reserve Bank of India (RBI) has granted approval to ICICI Bank for augmenting its stake in its subsidiary, ICICI Lombard General Insurance Company Limited.
This move comes as the central bank allows ICICI Bank to increase its ownership in ICICI Lombard by up to 4 per cent, to be executed in several phases. The private lender has shared the news of obtaining RBI’s consent for enhancing its stake in the subsidiary; however, the go-ahead remains contingent upon specific regulatory authorisations.
ICICI Bank conveyed its reception of the RBI’s approval by stating, “The Bank, in its disclosure filed with the stock exchanges on May 28, 2023, had communicated that its Board of Directors had approved an increase in the shareholding in ICICI Lombard General Insurance Company Limited, in multiple tranches up to 4.0 per cent additional shareholding, as permissible under applicable law, to ensure compliance with Section 19(2) of the Banking Regulation Act, 1949 and make the Company, a subsidiary of the Bank, subject to receipt of necessary regulatory approval(s).”
The bank further elaborated, “We wish to inform you that yesterday i.e. on August 4, 2023, in the afternoon the Bank received approval from the Reserve Bank of India in connection with the above. Certain other statutory/regulatory approval(s) are awaited.”
Can retain ownership with the extension
Earlier, on March 10, 2023, ICICI Bank informed stock exchanges about an extension provided by the RBI for divesting the bank’s shareholding in ICICI Lombard General Insurance Company Limited. The extension allows the bank to retain ownership of the company’s shares at less than 30 per cent of its paid-up capital until September 9, 2024. As of March 31, 2023, ICICI Bank currently holds 48.02 per cent of the Company.
The bank’s Board of Directors had initially sanctioned an increase in shareholding in the subsidiary, spanning multiple tranches and amounting to up to 4.0 per cent additional shareholding. This was deemed permissible under applicable regulations, with the goal of aligning with Section 19(2) of the Banking Regulation Act, 1949, and establishing the company as a subsidiary of ICICI Bank, contingent upon the reception of necessary regulatory green lights. The bank intends to acquire a minimum of 2.5 per cent stake from the 4.0 per cent allotment before September 9, 2024.
