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

The case, set in 2021, discusses the exit of leading global bank Citigroup from its consumer business in India. Citi’s plan to exit the consumer banking business, which it started way back in 1985 to become the largest foreign bank in India, marked the end of an era. As promoter-shareholder, Citi India played an important role in establishing important market intermediaries like depositories, Credit bureaus, clearing, and payment institutions. Citi India helped lay the foundation of the Indian software industry by establishing Citicorp Overseas Software Ltd. and iFlex Solutions Ltd.; it pioneered the ITES industry in financial services through Citigroup Global Services Ltd. Citi India’s business comprised credit cards, retail banking, home loans, and wealth management. As of 2021, Citi India was a significant foreign investor in the Indian financial market. On April 15, 2021, Citi announced that it was exiting retail banking in India and 12 other markets, citing lack of scale to compete. The exit from India was part of a restructuring plan of the bank to focus only on four wealth centers in Asia. Citi’s exit from retail banking in India was in line with the trend among foreign banks to fully or partially exit the country since 2009 as high capital and regulatory requirements in India pushed them to retreat into their domestic markets to save on costs and protect profitability. UK-based Barclays, Deutsche Bank, BNP Paribas, HSBC, and Standard Chartered had cut down their operations in India. Banking experts wondered why Citi was not able to scale up and create a profitable business in a growing market like India where many private banks had been able to successfully grow.

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