Citigroup's Exit from India: Restructuring or Failure to Scale Up?

Global Economic Impact of Coronavirus – Assessment and Mitigation (B)
Case Code: BSTR627
Case Length: 12 Pages
Period: 1985- 2021
Pub Date: 2021
Teaching Note: Available
Price: Rs.400
Organization: Citigroup
Industry: Banking
Countries: India
Themes: Business Level Strategies, Banks and Banking, Financial Institutions, Strategic Planning
Global Economic Impact of Coronavirus – Assessment and Mitigation (B)
Abstract Case Intro 1 Case Intro 2 Excerpts


Citi’s Entry into India

Citi started retail operations in India in 1985 and was among the pioneers of credit cards. It launched cash management services in 1986, the first to do so in the corporate banking segment in India. In 1986, Citi India also launched auto loans. It pioneered organized auto financing in India in August 1986. The company also entered the personal loan business in 1989 and was considered a pioneer in this segment with a healthy market share of 24% with expansion through various innovative products. Citi India was the first to launch Home Credit in 1990..

Foreign Banks in India

The survival of the banking system in India through the financial crisis of 2008-2009 exhibited its strengths and most foreign banks present in India believed that India was a market with huge potential. They therefore continued to look for the best possible opportunities and role they could play amid the heightened competition, political economy, and changing financial services regulations..

Citigroup’s Exit of Consumer Business in India

In a big move, while announcing Citigroup’s first-quarter earnings for 2021, Jane, global CEO, announced on April 15, 2021, that the bank was exiting consumer banking in 13 countries, including India. “While the other 13 markets have excellent businesses, we don’t have the scale we need to compete. 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. We will continue to update you on strategic decisions as we make them while we work to increase the returns we deliver to our shareholders,” Jane added..

Why Citi India Was Selling Its Retail Banking Business

Citi exited the India business (not wealth management and institutional business) because it was not contributing much to its profits. The retail sector contributed less than 20% to the overall profit of Citibank’s India operations in financial year 2020-21. Overall, it was just 1.5% of the bank’s global share..

Future Outlook

“It is a good move,” Ashvin told Fortune India. “Retail banking is more like an onion with several layers, with the tier-1, 2, and 3 are getting saturated and 4, 5, and 6 are getting opened up. It is not easy for foreign banks to expand into small towns,” he said. The tier-wise classification of centers was based on population. Tier 1 comprised metropolitan and urban centers; tiers 2, 3, and 4 comprised semi-urban centers, and tiers 5 and 6 comprised rural centres. “Citi has been in India for many years. So, it would have evaluated the pros and cons well before taking the final call,” Ashvin added..


Exhibit I: Citi’s Vision, Mission and Values
Exhibit II: Citi Segments
Exhibit III: Consolidated Balance Sheet of Foreign Banks, 2018-19

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