Why CITI Bank is Leaving India?

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One of the leading Foreign banks in India, Citibank, has decided to exit from its retail banking business in India. What are the reasons behind this decision of Citibank? Are the concerned reasons follow up for other financial services. Know more about all such matters in this blog.


Citibank is a subsidiary of US-based Financial Services MNCs Citigroup. On Thursday 15th April 2021, the group announced its exit from Retail Banking Business from India and 12 other nations to focus on their institutional businesses.

Possible Reasons behind exit from Retail Banking Business in India?

i) Lack of Strong Liability Franchise:
  • Specifically in India, there is a need for high depositors in the bank to maintain a strong liability franchise.
  • Also, that figure should continue to expand and growth visibility should be healthy enough.
  • As per Indian Express, Citibank is having a near customer base of 2.9 million retail customers with 1.2 million bank accounts.
  • And hence in this context, Citibank failed to build a strong base of customers despite various strategies.
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ii) Lack of Ability to Scale Rapidly:
  • As of March 2020, Citibank is only having 35 branches in India.
  • The Banking business of Citi Group in India has commenced in 1902 but in its history of nearly 120 years, they have only established 35 branches which is very low as for scalability of any business.
iii) Trying to Sell Developed Market Products:
  • India is an emerging economy and not a developed market.
  • One of the biggest reasons behind the low penetration of Citibank could be the company’s strategy to sell the developed market investment products in Emerging markets like India.

Does the same scenario apply in other Financial Services sectors?

  • Yes, the same scene might take place in Mutual Fund Industry and possibly Insurance Sector as well.
  • For Instance, Foreign Players in the MF industry like JP Morgan, Morgan Stanley, Fidelity, and Franklin who suffering the most, are struggling very hard in the Indian Market.
  • Currently, all these foreign players are in a joint venture with Indian Players.
  • Also, Insurance Sector has opened recently for foreign players, and will be an interesting thing to watch how things will work in that sector as well.
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Amid the scenario of the exit of MNC players of foreign banks from India, it is but obvious that the Private Players in the market will continue to grow rapidly in the coming years.

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