The Competition Commission of India (CCI) has approved Japanese underwriter Nippon Life's bid to acquire 26% stake in Reliance Capital's mutual fund arm RCAML.

The INR14500m ($265m) worth deal is believed to be the largest Foreign Direct Investment (FDI) deal in any Indian asset management firm.

"Considering the facts on record and the details provided in the notice…And the assessment of the proposed combination, the Commission is of the opinion that the proposed combination is not likely to have any appreciable adverse effect on competition in India and therefore… approves the proposed combination," CCI said in an statement.

CCI, the regulatory agency in India said that Nippon Life does not own direct operations or presence in India in the same space, except for a 26% equity participation in Reliance Life Insurance Company Limited, a subsidiary of RCap.

"It is observed from the information available on the website of the Sebi that there are more than 40 other AMCs registered with the Sebi providing services similar to the asset management services provided by RCAML in India and there are more than 250 portfolio managers registered with Sebi providing similar services," CCI added.

Reliance Capital Asset Management (RCAM), which manages approximately INR1, 400bn ($25.66bn) of assets, disposed a 26% stake sale in its life insurance venture, Reliance Life, to Nippon Life for over INR30,000m ($550m).

CCI is empowered by an Act of Parliament to scrutinize high-value deals that could have a bearing on fair competition in the market.