Citibank has approached the foreign investment promotion board (FIPB) seeking permission to set up a wholly owned subsidiary for primary dealership activities. The company proposes to invest Rs 50 crore initially in the downstream subsidiary, said sources.
The net worth of Citicorp Finance India Ltd, the applicant firm, is Rs 307 crore and it is, thereby, eligible to carry out primary dealership activities through a subsidiary as per Reserve Bank of India guidelines. The company approached the RBI, which, however, directed the applicant to approach the FIPB since this was a case of downstream investment by a registered subsidiary of a foreign company in India.
The applicant company, CFIL, provides financial services, hire purchase financing for commercial vehicles and construction equipment. It also provides funding to corporates for investing in corporate bonds, inter-corporate deposits, etc, and houses a venture capital portfolio. At the end of March 31, 2001, CFIL registered a gross income of Rs 243 crore with a net profit of Rs 43 crore. Reserves stood at Rs 27.62 crore.
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CFIL is a 100 per cent subsidiary of Citibank Overseas Investment Corporation, which is an investment company and a wholly-owned subsidiary of Citibank NA US. Citibank NA is ultimately owned by Citigroup Inc of the US.
In its application to the FIPB, the company has said that the government securities market has abundant business opportunity and can be a tool to give a boost to the Indian economy.
The company further said that as a result of the government