ICICI Bank gets SEBI warning letter; no material impact, says lender

Capital market regulator SEBI has sent a warning letter to ICICI Bank over over alleged non-compliance with its foreign portfolio investor (FPI) rulebook.

In a regulatory filing post-market hours on Thursday, the private sector bank said it had received the warning letter, dated June 1, on June 2.

The letter was received at 3:55 pm on June 2, the bank noted.

What is the matter?

According to ICICI Bank, the issue relates to the lender's role as a custodian -- it holds and manages securities for clients, including FPIs.

SEBI has alleged that the private bank permitted a Foreign Portfolio Investor (FPI) to withdraw or repatriate funds before completing the mandatory retention period under the Voluntary Retention Route (VRR).

This action is considered a violation of the central bank's master direction in this regard, dated January 7, 2025, and of SEBI's FPI Regulations 2019.

What is VRR?

VRR is a central bank-administered framework that allows FPIs to invest in Indian debt and related instruments on the condition that they keep a minimum portion of their funds invested for a fixed retention period.

In return, they get more flexible investment limits compared to regular routes.

What it means in this case, according to SEBI, is that the FPI was required to maintain funds for the committed period but repatriated them early.

This breach triggered SEBI’s warning to the custodian bank.

No material impact on finances, operations or business: ICICI Bank

ICICI Bank's filing stated that there is no material impact on its finances, operations, business or related activities.

It said the disclosure was delayed due to an internal oversight. "The disclosure could not be submitted within the prescribed timeline due to an inadvertent internal delay," it noted.

ICICI Bank shares vs Nifty 50 vs Nifty Bank

Earlier on Thursday, ICICI Bank shares ended 0.8 per cent higher at Rs 1,252.3 apiece on BSE in a volatile Mumbai market.

At this level, the stock has lost 6.4 per cent of its value so far this year, while the Nifty 50 and Nifty Bank indices have declined by 10.4 per cent and 9.1 per cent, respectively.

In a year, the ICICI Bank stock (ICICIBANK) has fallen 12.4 per cent while the Nifty 50 and Nifty Bank gauges have slipped 4.9 per cent and 2.5 per cent, respectively.

ICICI Bank is considered a key market mover on Dalal Street, with the stock holding a weightage of 8.32 per cent in the Nifty 50 and 13.63 per cent in the Nifty Bank.

FPIs likely to get relief?

Meanwhile, the central government is working on a proposal to provide tax relief to FPIs, likely through an ordinance, according to sources.

The proposal was discussed during the Cabinet meeting held on Wednesday with necessary approvals in place, they said. Read more