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Citibank said on Thursday it had no plan to create a wholly-owned subsidiary (WOS) in India. Instead, it would continue to expand by opening more branches.
The bank has 42 branches, third highest among foreign lenders, and plans to add three more in a few months.
"We have (been present through) the subsidiary route in many countries in Asia and it is not new to us. But, for now, we are not keen on going ahead with it (creating a subsidiary) in India," Anand Selvakesari, head of consumer business for the Asean region at Citibank, told reporters.
In February, this newspaper had reported that Citibank had officially informed the Reserve Bank of India (RBI) about its decision in this regard.
Selvakesari said this was decided after evaluating RBI's guidelines on subsidiarisation of foreign banks in the country. RBI issued these in November 2013, promising near-national treatment to those opting for the subsidiary mode of presence.
However, a number of factors have made most foreign lenders reluctant to opt for WOS. These include the reciprocity clause, stiff priority sector lending targets and uncertainty on stamp duty and in certain areas of taxation.
Analysts say with the reciprocity clause, foreign banks will be given unfettered branch access in India after they set up a subsidiary only if their home countries allow Indian lenders to open branches there without much restriction. Indian banks are not allowed to expand their network freely in the US, for instance, Citi's headquarters.
RBI has not made subsidiarisation mandatory for foreign banks that entered India before August, 2010. Meanwhile, the bank on Thursday launched Citi Prestige, a global credit card on the Visa Infinite platform.
The bank said it will open its three new branches in Nagpur, Thane and Serilingampally, near Hyderabad. India is among the top 10 markets in terms of revenue in Citigroup, Jonathan Larsen, the bank's consumer banking head for Asia-Pacific region, said. He added that India also figures among the group's top three fastest growing markets in the retail segment.
Global credit card
The bank on Thursday launched Citi Prestige, a global credit card on the Visa Infinite platform. Apart from earning reward points while swiping the card for transactions, you can also earn points if you have a relationship with the bank. If you have a home loan, you will get additional points depending on the amount, provided the card is active, said Muge Yuzuak, head of cards and personal loans, Citibank India.
India is the ninth market where the card has been launched after Mexico, Columbia, Singapore, Hong Kong, Japan, Malaysia and Korea.
