ICICI Bank gets time till Sept 2024 to pare stake in ICICI Lombard

The Reserve Bank of India has approved ICICI Bank's request to extend the deadline for divesting its shareholding in ICICI Lombard General Insurance to below 30% of the company's paid-up capital. The bank now has time until September 2024 to reduce stake. ICICI Bank announced on Friday that it has received approval from the RBI in a letter dated March 10, 2023 extending the deadline. Initially, the bank was required to divest its stake in ICICI Lombard General Insurance by September 2023 to 30% from 48.02%, in accordance with RBI regulations.

However, the bank had requested the RBI for an extension of the deadline due to market conditions affecting its ability to execute the divestment.

As of December 31, 2022, ICICI Bank held a 48.02% stake in the general insurance company.

RBI has been asking banks to reduce their stake in insurance companies to focus on core banking activities amid growing interconnectedness between banks and insurance companies. On the other hand, the insurance regulator has been concerned over promoters bringing down their controlling stake in insurance companies, as it may impact the solvency margin and financial ability of the company.

Several banks have been reducing their shareholding in insurance companies to comply with RBI's norms. In 2020, ICICI Bank reduced its stake in ICICI Prudential Life Insurance to comply with RBI's norms. Similarly, State Bank of India reduced its stake in SBI Life Insurance to meet RBI's norms in 2019. ICICI Lombard was the first non-life insurance company to list on the stock exchanges in 2017.