ICICI Bank has made a strategic decision to increase its stake in ICICI Lombard General, reversing its previous plan to reduce its shareholding in the company.
In a meeting held on Sunday , the board approved the conversion of ICICI Lombard into a subsidiary.
Earlier, on March 10, ICICI Bank had disclosed that the Reserve Bank of India (RBI) had extended the deadline for reducing its stake in ICICI Lombard to below 30 percent of the company’s paid-up capital until September 9, 2024.
However, the recent decision indicates a change in approach by the bank.
Under the new plan, ICICI Bank aims to acquire an additional 4 percent stake in ICICI Lombard in multiple tranches.
The bank intends to purchase at least 2.5 percent of the additional stake before September 9, 2024.
The RBI regulations permit banks to hold a stake in insurance companies as a subsidiary (above 50 percent) or limit their holding to 30 percent.
Furthermore, the board of ICICI Bank also approved the reappointments of Hari Mundra and B Sriram as independent directors for their second terms.
Hari Mundra, a visiting professor at IIM Ahmedabad, will serve from October 26, 2023, until October 25, 2024, when he reaches the age of 75.
B Sriram, a former managing director of IDBI Bank, will continue in his role from January 14, 2024, to January 13, 2027, subject to shareholder consent.
In addition to the director reappointments, the board extended Sandeep Batra’s term as the executive director of ICICI Bank.
Batra’s initial appointment was approved by the shareholders and the RBI, commencing on December 23, 2020, for a duration of five years.
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The board has now extended his term for an additional two years, from December 23, 2023, to December 22, 2025.
These developments signify ICICI Bank’s revised approach towards its stake in ICICI Lombard General, showcasing its commitment to the insurance subsidiary and the expertise of its directors.