Temasek could face pressure on ICICI stake

India’s ICICI bank may face being labelled a foreign bank following changes to the country’s rules, and this could put pressure on its largest shareholder Temasek which owns around 20 percent of the bank.

According to a report in THE HINDU Business Line, ICICI Bank on Tuesday said it cannot be termed foreign bank and is awaiting further clarification on the circular regarding new FDI norms.

Commenting on the concerns that ICICI Bank and some other domestic banks could be classified as foreign-owned in accordance with the government's new FDI guidelines, ICICI Bank Joint Managing Director Ms Chanda Kochhar today said that "nothing has changed in the ownership'' to make it a foreign-owned bank. ''The shareholding pattern of the bank has remained like this for many years," said Ms Kochhar.

If ICICI was determined to be a foreign-owned bank, one option could be to reduce foreign investment in the bank, said analysts, noting that Temasek was the largest foreign investor. Temasek has had similar problems in Indonesia and sold its stake related to Bank Indonesia International.

"There is nothing that has changed in the ownership pattern,'' Ms Kochhar told reporters on the sidelines of an event organised by FICCI here. "If there is further clarification (on the circular) that can come, that is what everybody is awaiting,'' she said.

The government, earlier this year, came out with new guidelines for foreign direct investment, as per which total foreign holding in a company should include the stake held by non-resident Indians, equity through American and global depository receipts as also foreign currency convertible bonds and convertible preference shares.