Ruling out an Indian subsidiary, Citibank has said it believes in the dual model wherein both branches and a wholly owned subsidiary exist. In an email response to Shayan Ghosh, Citibank India CEO Pramit Jhaveri said there are opportunities and challenges in any market, and India is no different where the cost of banking is relatively high with low ticket sizes challenging productivity. Excerpts:
You have got your first branch approval in five years. What are the plans ahead?
We are pleased with this exciting milestone. With the additions of Nagpur, Thane and Serilingampally to our network over the next 3-4 months, our footprint in India will touch 45 branches across 33 locations. These give us the opportunity to deliver our innovative range of products and services across our client segments and, at the same time, help us serve the regulator?s larger agenda to cater to the under-banked areas of the country.
Citibank has ruled out setting up an Indian subsidiary. Don?t you see opportunities in the Indian banking space?
We absolutely see opportunities in the Indian banking space. We believe our current structure here supports the bank?s overall business strategy to grow efficiently and profitably. We will continue to focus on our chosen client segments, and provide them with world-class value propositions that our platform can support. Citibank will continue to make banking simpler and faster for our customers in India through our combined presence of brick-and-mortar as well as digital channels.
Our base of customers is extremely digital savvy: Over 60% of Citibank India?s active customer base uses online banking and more than 72% accesses their statements digitally. Over 84% of all financial transactions and more than half of all service interactions by consumers are done online. Therefore, we will continuously innovate to reach existing and new customers through technology.
While we currently operate under the existing branch model, as allowed by the regulator, we continue to engage with them: One thought we have suggested is the dual model, prevalent in many countries, with the institutional business in a branch to better cater to global customers and the retail business in a WOS (wholly owned subsidiary) to ring-fence and protect the interests of small depositors and promote financial inclusion.
What are the constraints for Citi to operate in India?
There are opportunities and challenges in any market. India is no different. The cost of banking is relatively high with low ticket sizes challenging productivity. Also, there are limitations on liquidity due to reserves and other requirements, making balance sheet management a challenge.
On the retail side, the market has enormous opportunities for those who can provide customised services quickly and efficiently to serve the needs of the global Indian. At Citi, innovation is part of our DNA and we work tirelessly to ensure we create better products delivered digitally across multiple channels that increase engagement with our customers while reducing the cost of banking at the same time.
For any institution, managing the business responsibly and profitably is key to sustained growth. While fees on corporate and investment banking have been under pressure for the industry as a whole, we believe this will improve as market participants become more disciplined on the back of improving market sentiment. We value client relationships and will continue to grow as fast as our clients want us to grow.
Which are the focus areas for Citibank in India at present?
We believe the three key trends of urbanisation, digitisation and globalisation are shaping the future of our business here in India and globally. We are focused in integrating these trends across our businesses in India within consumer, commercial, corporate and investment banking.
Our focus in India extends equally across wholesale and retail banking. On the corporate side, we remain focused on serving the growing needs of large Indian companies, MNCs, middle market and small enterprises. It is indeed a global platform which helps us serve our Indian clients in over 30 countries across the world and, at the same time, enables us to serve global MNCs and financial institutions from more than 54 nations worldwide doing business in India. Further, our global distribution platform allows us to raise debt and equity capital for Indian companies, financial institutions and government-owned companies alike.
In retail banking, in spite of an extremely small physical footprint, we are very fortunate to have significant market shares in each of our chosen client segments and product areas.
What do you think of RBI telling foreign banks to increase priority sector lending to 40% in five years?
We have always been compliant with PSL requirements and we do have a plan to achieve the defined targets per the timeline proposed by the regulator. We do believe this is an aggressive target for foreign banks like ours, given our limited reach. Challenges in our opinion exist in being able to build a sustainable business in areas such as agriculture and weaker sections, simply because we have a very limited footprint and branch network in the country, which consequently limits our ability to access these segments.
