It was soon after he took over the India assignment that I first met Sanjay Nayar, Citigroup's India CEO and area head for Sri Lanka, Bangladesh and Nepal.
It was late in the evening, and Nayar was standing in one corner of his room, gulping down sevpuri from a plate. He had skipped lunch because of a series of meetings at the Citi headquarters at the Bandra-Kurla complex in Mumbai.
Today, we're meeting for lunch at 1.00 pm at Ming Yang, the Chinese restaurant at Taj Land's End . It is 1.10 and there's still no sign of Nayar. I wonder if he's got stuck in meetings this time too. Nayar first wanted to have sea food at a south Mumbai restaurant but later changed his plan to save on travel time.
He appears at 1.15, profusely apologising for being late. I am not entirely wrong. He was busy announcing an organisational restructuring in his office. The commercial banking division of Citi in India is being split into two "" asset-based finance (ABF) and small and medium enterprises (SMEs) "" to be headed by two young executives.
"Citi will create new asset classes. So far, the focus has mainly been on truck financing. Now we will go for financing equipment for road construction, printing machines and medical equipment. In the case of SMEs, we are adopting a horizontal strategy. The branches will reach out to small manufacturers, spice traders.... It's a sort of community banking. We will go beyond dealers and readymade garment exporters," says Nayar.
Ming Yang is almost empty. The only other table is occupied by another foreign banker, Deutsche Bank's India head Gunit Chadha. "Once you are through with him, you can come to my table. I will tell you more about Sanjay," Gunit tells me.
We settle in a quiet corner and order some fresh lime soda, assorted imperial dimsums as starters, fish in hot bean sauce, Mala chicken and Cantonese fried rice for the main course. Nayar explains that the focus on SMEs and ABF is a well thought out strategy as it will help Citi fulfil priority banking norms as and when it decides to become a locally incorporated company.
A foreign player needs to allocate only 32 per cent of its loans to the social sector. But when it becomes locally incorporated, it will need to have 40 per cent social lending and the bulk of it is for agriculture and small-scale industries. "India is over-banked but under-serviced. We have enormous opportunities," says Nayar.
Nayar says he loves spending time with people. This is his strategy to be on the top of business. Every evening, he is seen in cocktail circuits.
"I am a relationship man. I have tremendous energy. I love maintaining relationships with people at every level. Even now, I make at least 10 to 12 client calls every week. By being with people, I understand markets and products," he says reaching out for more dimsums.
How does it feel to be a part of the world's largest financial conglomerate? "Citi gives you freedom and encourages entrepreneurship and aggression. We could be doing well but always look at how the competition is doing," he says. If that's the case, why is Citi no longer the preferred employer of young business school graduates, I ask him.
"Frankly, we cannot compete with a player like Lehman Brothers which is picking up one or two candidates from the campus. Every year we take 40 to 50 freshers. As an employer, we are in the same league of ICICI Bank and Hindustan Lever," he says.
How does he like to position Citi? "We are the world's biggest financial conglomerate. In India, we are a huge local bank with global linkages. We would like to be in the midst of all global flows "" the NRI [non-resident Indian] money, Indian companies' overseas acquisitions, big mergers and acquisitions deals," says Nayar, adding spice to his fried rice.
After this preamble, I ask him the obvious: his views on the Reserve Bank of India's (RBI's) policy on opening up the banking sector for foreign players.
"Being a salesman all my life, I always look at all involved parties as clients. In that sense, the RBI is also a client. What does it want? It is for a calibrated approach towards opening up. It is giving time to public sector banks to be more efficient and better governed. It wants the private sector to consolidate and remove the weaker banks."
Nayar warms to his subject. "Citi is known for technology, product innovation and risk management. We have been here for 103 years. I had thought that allowing a 74 per cent stake in a local bank could be a good beginning but we'll have to wait for four years." So, he is disappointed? Finally, I manage to provoke him.
"If you don't want me to acquire a bank, allow me to have more branches. We have only 39 branches. Ideally, we should have 150 to 175. Please, allow us to grow. There is no doubt that the regulator is transparent and believes in a consultative process. But its approach towards opening up does not speak much about reforms. It has gone 'inwards'," Nayar says, helping himself to a little more Mala chicken and rice.
Is there a level playing field? "First, there is a restriction on branches. Then, we are not allowed to touch government business. No public sector undertaking is allowed to keep money with foreign banks. Please treat us like an Indian bank. Given a chance, we will go to rural India," he says.
We ask for some Chinese tea to wash down the food. I draw his attention to the fact that foreign banks have been slow in responding to the opening up of the sector. For instance, Ing Bank never waited for the RBI to announce the norms.
It went ahead and picked up a large stake in Vysya Bank "" possibly Citi could have done the same thing. He refuses to buy my logic. "We are too big. We can't take the risk of unclear regulation," Nayar says subtly hinting at the HSBC-UTI Bank fiasco.
I ask him about competition. Nayar says banking in India has changed forever and it is now a big boys' game. "It's all about size, stamina and scale. We compete with State Bank, ICICI Bank, Standard Chartered and to some extent HDFC Bank for mainline businesses. Then there are different niches where competition is fierce with smaller players," he points out.
Isn't Citi losing market shares in key areas such as auto loans and credit cards? "In auto loans, there is too much of competition and the spread is thinning. So, we are going slow. In the card business, however, we are still the number one, in terms of the usage and the amounts outstanding," Nayar says with confidence.
I can't resist the temptation of asking him whether he still employs strongmen to collect card overdues? He looks unfazed and says all talks about goons chasing card defaulters are rubbish.
So, is everything hunky-dory on the banking turf? He pauses and then says, "There's too much of liquidity chasing clients. It's funny but true that there are more venture capitalists than targets. So, we are seeing irrational pricing of loans. One can have four credit cards now. These are classic signs of good times but remember bad loans are always created in good times."
Despite all this, India is one of the top 10 markets for Citi. To illustrate India's importance in Citi's global strategy, he cites the example of China. "We started around the same time both in India and China. Today our business in China is one-seventh the one in India", says Nayar.
We go for another round of Chinese tea as Nayar declines to have any dessert. I ask him the recipe for his success. He repeats what he has said in the beginning: "I am a relationship manager whose job is to make money for his bank. Every day, I go client by client, deal by deal and see how much money the bank is making. The bottomline is the last word."
As we get up to leave, we see Deutsche Bank's Chadha eating mangoes. "Come, have some mango. I will tell you more about Sanjay," he waves at me. I politely excuse myself. The Citi CEO, however, stays back to spend time with Chadha. Perhaps, for his relationship management.
