The Foreign Investment Promotion Board has given ICICI Bank the thumbs-up to divest its 24% interest in ICICI Financial Services, the bank's holding firm for insurance business. Instead, the group will pursue opportunities with foreign investors, Indian Express has reported.

The request for approval had previously been rejected in June 2007 by the Foreign Investment Promotion Board (FIPB) as the application did not meet the rules of Indian regulator the Insurance Regulatory and Development Authority (IRDA), which stated that a subsidiary company was not allowed to be a promoter of insurance business, the Times of India revealed.

In response to this, the bank submitted a new proposal, which claimed that despite transferring the shares in the insurance business, it will continue to be the promoter of its ICICI Financial Services. As a result, it did not violate any IRDA rules, reported the Times of India.

The proposal is now waiting for the final approval from finance minister P Chidambaram, although the largest private sector bank will also have to seek RBI’s approval before it can sell the 24% stake to a foreign investor, Indian Express reported, citing anonymous sources.