The government has asked the chiefs of state-owned insurance companies LIC and GIC Re to withdraw from the board of ICICI Bank. It said the presence of LIC and GIC Re chiefs on the board of the private sector bank, which has own life and general insurance arms that compete with their respective firms, could amount to conflict of interest.

The chiefs of both LIC and GIC Re enjoyed board-level representation at the bank as both the institutions were promoters of ICICI Ltd which was merged with ICICI Bank. The bank runs its own life insurance and general insurance businesses through ICICI Pru Life Insurance and ICICI Lombard General Insurance Company, respectively.

Infact, LIC chairman TS Vijayan and GIC Re CMD Yogesh Lohiya have already stopped attending the board meeting of the ICICI Bank?s board meeting. All three companies ICICI Bank, LIC and GIC Re have confirmed the development to FE.

While the Vijayan has stopped attending the ICICI Bank board meeting recently, Lohiya had not participated in the same since he became CMD of GIC Re.

Currently LIC has a stake of 10.52% in ICICI Bank while New India Assurance which was represented by GIC Re holds around 1.07%. The insurance regulator, Irda also had issued a detailed guidelines on corporate governance among the insurance companies.The norms stipulate that the auditors, actuaries, directors and senior Managers shall not simultaneously hold two positions in the insurance company that can result in conflict of interest.

Accordingly conflicts of interest of significant owners?shareholders who singly or together with their associates, own more than 10 % of the capital of the insurer or who have the ability to influence the decisions of the board- will have to be disclosed to the Irda..

Further significant owners shall not place themselves in a position in which there is conflict between their duties to the company and their personal interests or duties to others. Similarly, conflicts of interests of directors of an insurance company shall be disclosed to the Irda. A conflict of interest arises when the interests of a director are in conflict with the interests of other stakeholders in the company where he is director. Where there is failure to disclose interests which are likely to lead to a conflict, the Irda may take action as deemed fit.