What will happen to Citibank customers’ accounts and credit cards as it exits India?

Citibank has hinted there won’t be any possible layoff and closure of physical branches in the countries it is exiting. …

On a day when it recorded its highest-ever quarterly profits, New York-based Citigroup said it will exit the retail business in India and 12 other countries across Asia, Europe, Africa, and West Asia.

“While the other 13 markets have excellent businesses, we don’t have the scale we need to compete,” Citigroup’s global CEO Jane Fraser said. “We believe our capital, investment dollars, and other resources are better deployed against higher returning opportunities in wealth management and our institutional businesses in Asia.”

This is certainly true for India where Citibank has struggled to get a bigger share of the retail banking industry. The majority of the bank’s profits from India in the financial year 2020 came from other income such as brokerage and commission.

Citibank India retail banking

Citigroup, which has been operational in India since 1902, did not explain what will happen to its existing business in these countries. Some media reporters, however, are speculating the bank will look to sell its consumer business, including the lucrative credit card segment.

Either way, the bank’s operations in India, including bank accounts, fixed deposits, and credit cards won’t be impacted. Citibank has also hinted there won’t be any possible layoff and closure of physical branches in the countries it is exiting.

“There is no immediate change to our operations and no immediate impact to our colleagues as a result of this announcement. In the interim, we will continue to serve our clients with the same care, empathy, and dedication that we do today,” said Ashu Khullar, CEO, Citi India.

In India, Citibank currently has 35 branches with 19,235 employees. It has a sizeable business with a balance sheet of Rs2.18 lakh crore ($29 billion). It has loans and deposits worth Rs66,507 crore and Rs157,869 crore, respectively. The bank has around 3 million retail customers, and 2.2 million credit card users. It was one of the pioneers of popularising credit cards in India and today accounts for 6% of the market share.

Citibank’s exit from the retail business comes at a time when Indian lenders are looking to scale up in this segment. With businesses shying away from taking loans for expanding their capacity amid the Covid-19 pandemic, Indian banks are focusing on the retail customers to expand their balance sheet.

Also, retail loans are considered less risky compared to corporate loans because of their relatively smaller size. At the same time, they have higher margins compared to corporate loans.

Citi isn’t the first foreign bank to exit or downsize in India. Many foreign banks including Barclays, HSBC, Morgan Stanley and Bank of America-Merrill Lynch have either shut shop or scaled down their operations in India due to high capital requirements and costs.

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