The Reserve Bank of India (RBI) is likely to reiterate its view that it would be comfortable only with holding companies at the top in financial services groups when it releases final guidelines on setting up bank holding companies or financial holding companies by November 15.
Meanwhile, ICICI Bank said it is open to listing its insurance subsidiaries individually if the RBI vetoes intermediate holding companies.
The issue is being closely watched by the insurance industry since it has implications on whether companies will be able to attract foreign capital to grow their businesses.
Accessing such funds is difficult because of a 26 per cent limit on foreign direct investment in insurance.
The trigger for RBI's guidelines was an application from ICICI Bank to set up an intermediate holding company. The bank received permission from the Insurance Regulatory and Development Authority (IRDA) to do so.
The bank also received permission in August from the Foreign Investment Promotion Board to sell 24 per cent to foreign investors, including private equity investors General Atlantic, Government of Singapore Investment Corporation, Temasek and Crown Capital, in the holding company called ICICI Financial Services.
However, the bank's application to the RBI for approval is pending.
SBI was the only other bank that had announced intentions to set up an intermediate holding company for its insurance and asset management businesses.
ICICI Bank has UK-based Prudential as its partner in its life insurance subsidiary and Lombard in its general insurance venture. SBI has French life insurer Cardiff as its partner in its life insurance venture.
RBI's concern is that such a company would leave an unregulated entity in the system and that the bank would continue to be ultimately responsible for capital requirements of insurance ventures and the risks involved in insurance business.
The banking regulator has suggested a model in which bank and other non-bank subsidiaries in a banking group would be owned by a holding firm.