FDI rules tinkering for banks may need Cabinet nod

Policy changes giving exemption to the private sector banks, including the ICICI Bank, from new FDI guidelines, may require Cabinet approval even as views of the finance ministry and the Reserve Bank of India have been sought on the contentious issue.

The ICICI Bank letter seeking policy clarity on the controversial changes in the FDI guidelines from the Department of Industrial Policy and Promotion (DIPP) has been circulated to the Financial Services Department and the RBI, a senior official said.

He said the issue may have to go back to the Cabinet in case 'material' amendments have to be brought into the rules for the foreign direct investment issued in February.

"The Cabinet approval would be required for amendments since the February guidelines were approved by the Cabinet," the official said. However, it may not need the Cabinet nod in case the DIPP or the Financial Services Department give only clarification on the issue.

With the changes in the FDI rules through a string of 'press notes' several private sector banks like ICICI Bank and HDFC Bank found that their status would change from 'resident' to 'non-resident'.