ICICI, HDFC Bank insist they are Indian

Commerce minister says discussion on but present foreign investment rules are satisfactory.

The country’s two largest private sector lenders, ICICI Bank and HDFC Bank, on Monday said they remained Indian banks, even as they sought official clarity from the Union government on their status.

The statement comes in the wake of the government move to treat future downstream investment by these banks as foreign investment. The finance ministry has convened a meeting of other government agencies tomorrow to discuss the issue. But, it has (so far) ruled out treating entities, including banks, with foreign holding of over 50 per cent as Indian companies. Banks such as ICICI and HDFC want this relaxed.

"Yes, there are some banks (in this category) and the talks are going on between RBI (the central bank), the finance ministry and the commerce and industry ministry but the FDI (foreign direct investment) policy, as of now, is doing very well... As far as ownership and control is concerned, it has been defined with clarity in the extant policy and the calculations for FDI are much simpler now. We should not look at it from a narrow prism," Commerce & Industry Minister Anand Sharma said on the sidelines of a conference.

Following the change in FDI rules, even the Reserve Bank of India had approached the government to clarify the matter.

Asked to comment, ICICI Bank Managing Director and CEO Chanda Kocchar told reporters: “We continue to remain an Indian-managed bank. Clarification has to emerge from the government.” She added that the classification of shareholders would not impact the day-to-day operations of the lender, as it does not invest in equity shares of other companies in a big way.

“There is no issue as such. It is a fact that we are an Indian bank, where the voting rights are with Indians. So, how can we be foreign? It is elementary,” added HDFC Bank Managing Director Aditya Puri.

Foreign investment rules allow for foreign investors to hold up to 74 per cent in private banks through secondary market purchases or through depository receipts.

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