Citi is the next international bank to reduce its operations in India
Major US bank Citi has joined a long list of foreign banks that have either left or reduced their business presence in India with the sale of its consumer banking business to Axis Bank for Rs 12,325 crore.
With the exception of Singaporean lender DBS Bank, which expanded its presence in the country and also acquired a domestic private sector bank, many foreign lenders reduced their presence in the country for a multitude of reasons, including global strategies. or also technological changes such as automation. and online banking that makes branch banking redundant.
Foreign lenders also have a litany of concerns over the regulatory landscape in India, starting with Priority Sector Lending (PSL), under which they must devote 40% of their loans to government-mandated segments or expose themselves. to a penalty, the insistence on operating as a wholly owned subsidiary and not as a branch of a foreign subsidiary to delineate local operations and also others such as data localization.
However, almost all major foreign lenders, including those who do not have banking operations in the country, use India as a back office to support their global operations and employ thousands of technicians in cities like Bengaluru and Pune.
Ahead of Wednesday’s announcement of Citi’s exit from retail banking, major global banks such as ANZ Grindlays, RBS and Commonwealth Bank of Australia scaled back operations in India.
Scaling Citi’s operations in India is part of its strategy to exit retail operations in 13 markets to conserve capital and focus on higher yielding revenue streams. It entered India in 1902 and launched the mainstream banking industry in 1985.
Earlier in 2012, major British bank Barclays massively reduced its operations in India by closing a third of its branches in non-metropolitan areas. The reduction of its operations in India was part of the UK-based bank’s strategy to move away from retail banking to focus more on vertical markets of corporate banking, investment banking and wealth management.
In 2016, Commonwealth Bank of Australia quit its operations in India, saying the decision was made after carefully assessing its operations in India alongside its refocused strategy.
In the same year, Royal Bank of Scotland Plc (RBS) also decided to end its corporate, retail and institutional banking activities in the Indian market. She wanted to reduce her global footprint. Australia and New Zealand Bank in 2000 ended its domestic operations after selling its Grindlays Bank unit to Standard Chartered for $1.34 billion. However, it reentered the Indian market in 2011 by opening a new branch in Mumbai. ANZ has been present in India since 1984 through its presence as Grindlays Bank.
In 2011, Deutsche Bank sold its credit card business to IndusInd Bank. In 2013, UBS exited its India operations while Morgan Stanley relinquished its banking license while continuing its investment banking business. Similarly, Merrill Lynch, Barclays and Standard Chartered reduced their operations in 2015.
HSBC halved its branches to just over two dozen on technological changes and reduced its presence in 14 cities in 2016, while BNP Paribas closed its wealth management business in India in 2020.