Citibank India is upbeat about the Union Budget proposal to increase foreign direct investment in banks from 49 per cent to 74 per cent. The bank is, however, awaiting the final guidelines before taking any decision.
"We are awaiting the fineprint. The government has said that the cap on voting rights (of 10 per cent) will be waived. That's very positive. Hiking the FDI from 49 per cent to 74 per cent is another important development. But the guidelines are not yet ready.
"For instance, we need to see the tax implications, (and the) stamp duty (ramifications) of (going through) the subsidiary route before taking a decision," Sanjay Nayar, chief executive officer, said.
The bank, which has a 20-branch network in India at present, will open five more during the year and will also expand its network of 140 ATMs.
"Ideally, we should have about 60 to 75 branches in 30 to 40 cities. Until the rules are clear for FDI and subsidiary routes, we will concentrate on organic growth," Nayar said.
With a $5.5 billion (about Rs 25,000 crore (Rs billion)) balance-sheet, Citibank has been showing a growth of 20 per cent and 25 per cent in its bottom line and top line, respectively, annually.
"The growth momentum will continue but we are not for taking too much risks. We need to keep an eye on external circumstances and follow a growth trajectory keeping the risk factors in mind," Nayar said.
In the late '90s, Citibank changed its track in India and targeted the urban middle-class by launching Suvidha. Suvidha is a banking account targeted at the salaried customers under which, the average minimum balance to be maintained is just Rs 1,000 per month.
"We are very focussed in our approach. We have a suite of products targeting non-resident Indians, high networth individuals, Suvidha customers, small and medium enterprises, and corporates. We will continue to serve these segments," Nayar said.
Citicorp Finance, the bank's non-banking arm, was recently recapitalised with a $25 million infusion in two tranches.
Citicorp works parallel with the bank to widen the latter's customer base. Retail deals account for roughly 40 per cent of Citibank India's business, while the corporate (including treasury) business contributes to the rest.
On the future course of action in India, Nayar said, "We are planning to finetune local products by using the global platform. For instance, hypothetically speaking, the Citibank credit cardholder can be allowed to use his unused credit limit for consumer loans. Or, for that matter, the securitisation of assets can be done in a different way."
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