Citibank not to embrace subsidiary route for India operations

Citibank will not take the subsidiary route to operate in India at this moment, according to top officials of the bank.

The Reserve Bank of India had proposed a new set of guidelines to encourage foreign banks, especially the systemically important ones, to embrace the wholly owned subsidiary (WoS) route to operate in India.

The central bank had even promised near national treatment to foreign banks, who convert into subsidiaries of their parent banks, in terms of opening of branches, among other things.

However, this failed to entice existing large foreign banks (barring one) to ring-fence their India operations from developments in their home country and elsewhere.

When asked the logic why Citibank is trying to avoid the subsidiarisation route, Anand Selvakesari, Country Business Manager, Consumer Bank, said, “As of now we are not participating in subsidiarisation. That does not mean that we cannot continue to grow.

“As this point, we have looked at it and based on what has been proposed, we have decided that we will not pursue it.”

He further evaded a response to what in the guidelines is preventing them from becoming a WoS, by adding, “I cannot say any particular issue… we also look at it from our business model perspective, so we have decided to not go ahead with it at this point.”

The patience at the Reserve Bank of India might be running out, its Governor Raghuram Rajan had indicated on April 2.

While addressing the post policy press meet, Rajan said, “At some point, this does become a regulatory issue, that in order to ensure banking sector’s stability, we need our large entities to be fully responsive to regulations here. And therefore, at some point if the carrot does not work, we may need to push a little harder as some other jurisdictions across the world have done.”

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