Why is Citibank leaving Indian Consumer Banking market

Alan Joseph Alan Joseph
Apr 17, 2021 5 min read
Why is Citibank leaving Indian Consumer Banking market

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Citi Bank had recently announced that it will exit retail banking operations in India and 12 other countries. The other countries include Australia, Indonesia, Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Russia, Thailand and Vietnam. Citi bank is one of the largest foreign banks in India. Let’s look at the below article to understand why Citi bank is leaving the Indian Consumer banking market.

About Citibank
Reasons Why Citibank is leaving Indian consumer banking market
Other Reasons for the exit from Indian banking market
Future Plans of Citibank
FAQ

About Citibank

Citibank had entered Indian retail banking in the year 1902. The business of Citi Bank in India consists of Credit Card business, retail banking, wealth management and home loans. The company has around 35 branches across India and around 29 lakh retail customers.

As of March 2020, Citi bank has around 12 lakh bank accounts and about 22 lakh credit card accounts. The bank has around 5.9% market share in the digital payments and around 6 % market share in credit card spends.

According to FY2020 Citi bank has a 15.4 % share in the market share of loans among the foreign banks in India. As of 31 March 2020, the total deposits in the bank were around INR 1.57 trillion which includes the deposits from other banks as well as customers.

It is estimated that around 26% of the foreign portfolio investments are through Citi bank India.


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Reasons Why Citibank is leaving Indian consumer banking market

American based banking major Citi bank is reducing its consumer operations as part of a broader strategic review. The new Chief Executive Officer, Jane Fraser is slimming down the operations in order to focus on the wealth management business since Citibank lacks the scale to compete in the retail banking operations.

Jane Fraser while announcing Citi bank’s quarterly results said that they have decided that they are going to double down on wealth as a result of the ongoing refresh of their strategy. He said that, while all the 13 markets including India have excellent business, Citi Bank doesn’t have the scale they require to compete.

Jane Fraser added on saying they believe that their capital, investment dollars and other resources are deployed better against the higher returning opportunities which include the wealth management and the institutional businesses in India.


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Other Reasons for the exit from Indian banking market

One of the other reasons for the exit from the retail market in India syncs with the trend of full or part exit of foreign banks in India from the year 2009. This is mainly because of the high capital and various other regulatory requirements in India.

These factors have pushed various foreign banks to retreat into their domestic markets in order to protect their profitability. Certain foreign banks such as Barclays, HSBC, Standard Chartered bank, etc. have curbed their operations in India and other banks such as J.P Morgan, Goldman Sachs, etc. have surrendered their banking licenses.

In addition to it, foreign banks do not find the small number of profits received from retail banks in India commercially attractive. This is one of the major reasons to exit the retail market when the domestic banks are in the process of finding more retail customers.


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Future Plans of Citibank

Citigroup has said that it will now focus on operating its global consumer banking business solely from four markets such as Singapore, Hong Kong, London and the UAE. The company said that it would continue its corporate and institutional banking business in the markets where it is ending planning to end the consumer operations.

In India, Citigroup will focus on offshoring or global business support rendering its services from major centers in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

Ashu Khullar who is the CEO of Citi India said that India is a strategic talent hub for Citi and he added on saying that they will continue to tap into the rich talent pool which is available in the country to grow Citi’s five solution centers which are a support for their global footprint.

He also added that, there was no immediate change to their operations and there wouldn’t be any immediate impact to the colleagues as a result of this announcement.

Citi is not closing down its business in India but it is changing hands after it gets a requisite regulatory approval and a proper buyer. The bank said that till the time of the sale there will be no impact for their customer as well as their 21,000 employees.

FAQ

Does Citibank have branches in India?

Citibank currently has 35 branches in India with 19,235 employees.

Is Citi and Citigroup the same?

Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.

Who is the CEO of Citibank India?

Ashu Khullar is the current CEO of Citibank India.

Conclusion

Citi had become one of the largest foreign banks in India over the years and its decision to close down the consumer business in the country marks the end of an era.

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