The takeover between ICICI Bank and Bank of Rajasthan (BoR) still has miles to go before reaching accomplishment. According to an official from the industry ministry, a new regulatory hurdle is still left to be cleared.

In most of the cases, mergers in the banking sector needs approval from RBI. But this merger would also require a government approval as the controversy of ICICI being considered as a foreign bank is still persistant.

"The merger needs the approval of the FIPB (Foreign Investment Promotion Board) under Press Note 3," an official of the department of industrial policy and promotion, which is responsible for formulating foreign investment policy said.

The feud over ICICI and HDFC Bank being considered as foreign banks under the new FDI norms is a boiling issue currently.

Now, Press Note 3 of 2009 series says that if a foreign company is to take over a local company then it would need approval from FIPB.

"It does not matter which bank approaches FIPB. One entity can also approach FIPB on behalf of the other," analyst with a consulting firm said.