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CHENNAI, May 15

CITIBANK India believes that `emerging local corporates (ELCs)', in other words, `small and medium enterprises', offer a large growth potential for the bank. That, coupled with the retail market, which is "growing exponentially," is enough to sustain the bank's operations in the country, in the next few years, Citibank officials said here.

While not ruling out acquisitions altogether, Citibank's Group Executive, Mr Jean-Paul Votron, said that the bank would prefer to grow organically. Mr Votron is in-charge of Citibank's operations in Central and Eastern Europe, West Asia, Africa and the Indian subcontinent.

"We have a lot of avenues to grow organically," he said at a press conference on Wednesday. Mr Votron, who met a cross-section of the bank's corporate clients here on Tuesday, said that the mood in the Indian corporate sector was still optimistic. "There is a great future in the SME sector," he said.

In response to a question, Mr Nanoo G. Pamnani, CEO-India & Regional Head-Sri Lanka, Bangladesh and Nepal, said that the bank had applied to the Reserve Bank for permission to open 10 more branches in India. At present, Citibank has 16 branches in 13 cities.

These branches, the 114 ATMs and "remote distribution channels" such as the Internet and tele banking, would be enough to support growth, the officials said.

Mr Sanjay Nayar, Managing Director and Area Head for India, Sri Lanka, Bangladesh and Nepal, observed that while there was a large capacity overhang in the Indian industry, corporates were also restructuring themselves, becoming "leaner and meaner" and generally shaping themselves up for competition. "These companies will do well when the recession ends," he said.

Mr Nayar said that the capital market - particularly the debt market -

offered another opportunity for growth. He also mentioned that the Indian public sector as an area of good potential.

Mr Sarvesh Sarup, Global Consumer Bank Head, said that the retail banking business was growing exponentially.

Citibank India is a member-company of Citigroup. Recently, the Government has allowed foreign banks the option to convert their India operations into a subsidiary (which would be incorporated in India). Asked if Citibank would opt for incorporating Citibank India as a banking company in India, Mr Pamnani said that the policy was not clear enough.

For example, would it make it easier for the subsidiary to open more branches ? "There still needs to be a framework around that," he said, adding that Citibank would wait until the policy became clearer.

In a background note, Citibank India has said that "with a capital of around $380 million, Citibank has a customer base of over 900 corporates, 3,000 SMEs and over 80,000 NRIs." (In a press release issued on January 30, the bank had said that it had a total capital invested of close to $300 million.)

The officials were not willing to disclose any figures relating to last year's performance, pending their finalisation. In 2000-01, Citibank India had deposits of Rs 14,052 crore (up from Rs 10,208 crore in the previous year), advances of Rs 9,273 crore (Rs 6,620 crore). Its operating profit was Rs 693 crore (Rs 483 crore) and net profit, Rs 285 crore (Rs 203 crore).

Citibank also has "two SEI Level 5 affiliates in software development," viz., Orbitech (formerly, Citicorp Overseas Software Ltd) and i-flex Solutions Ltd. i-flex develops software for the global financial services industry. Citibank's total software exports have exceeded $75 million.

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