ICICI Bank Ltd.

ICICI Bank, country's biggest private sector lender is likely to reduce its holding in Firstsource Solutions - the global business process outsourcing firm, which it originally promoted a decade ago. The bank is taking this move to comply with Reserve Bank of India’s new norm to restrict equity investments by banks in non-financial services.

Currently, the bank controls 18.1% of the company's equity, may have to reduce its holding to 10% in line with the guidelines issued by the banking regulator, which says that banks can hold only up to 10% of the capital of the investee company or 10% of its paid-up capital and reserves, which is less.

According to the RBI’s guidelines, bank will have to dilute its stake in the BPO for holding investments in excess of the limit with regulatory approval. During the three-month window, bank is likely to approach the RBI with a proposal on its existing investments.

The RBI has limited the equity investment of a bank and its subsidiaries in non-financial services at 20% of the investee company's paid-up share capital. According to the banking regulator, the new norms were aimed at checking indirect influence or misuse and to ensure that banks focus on their core banking activities. The new rules may not impact other banks, the state-owned lenders, who hardly have any investments in non-financial services.