We will double down on India, says Citigroup CEO (India) Ashu Khullar

Nearly four decades after having pioneered and run an aspirational retail banking business in the country, Citigroup’s move to jettison it came as a surprise. In his first media interview after the sale of its retail business to Axis Bank, Ashu Khullar, chief executive officer (India) and its regional head for South Asia, spoke to Raghu Mohan on the strategic thinking behind the move and the plot ahead. Edited excerpts:

What was the strategic thinking behind the decision to exit retail banking in India after having pioneered it back in the 1980s?

Jane Fraser, who took charge as global chief executive officer a year ago, did a review and it was emotionally a difficult decision (to exit retail banking). The strategic thinking was that as a global bank, our globality, expertise, and value to our clients play best to the institutions which value mobility. The consumer business has over the years become largely dominated by domestic players, not only in India but globally. So, it was a question of where we deploy the limited capital. For us, it’s the institutional businesses. It was not a decision specific to India, and is something we have done in 14 markets.

Is the “think global, act local” not a workable model anymore for foreign banks?

I don’t want to comment on other foreign banks. In the institutional business, globality plays wonderfully well. And what I’m excited about is that this fits in neatly with the Indian government’s strategy and our growth potential. India needs foreign capital because domestic savings are not enough. The government has been hugely focused on it through the various production-linked incentive schemes. In the multinational segment in India, we have a 30 per cent market share, and are, by far, the largest player (in it). I see a tremendous growth opportunity because of the supply-chain diversification. Then you have foreign institutional flows. Citi has a dominant share whether you look at the custody business, where we have a 26-27 per cent market share, the forex business, or the equity platform.

What will be your differentiator when compared to others which answer to your new profile, like Bank of America, J P Morgan, and Deutsche Bank?

To my mind it is the scale and size of our operations. We are the largest foreign bank in the country. We have a 30 per cent market share in the multinational segment, a 27 per cent share in the custody business, and around 8 per cent of India’s trade volumes through our trade platform, and we handle 5-6 per cent of domestic online payments. As a foreign bank, it’s kind of punching above our weight. And plus, the whole logic of that strategic shift, which was to exit consumer banking (in certain markets), was to double down on institutional businesses.

Now that retail liabilities are off the table in India, how do you fund the assets’ side?

We are a very large player in the cash-management business. And it is increasingly becoming a technology business as well where you need to embed yourself both on the collection and payment side, and in the clients’ systems. Our institutional business is more than well-funded from institutional deposits.

What’s your view on India Inc at this point in time?

The corporate sector, and I would argue even the banking sector, is in a very good space because of deleveraging and capital injection. We expect private sector capital expenditure to follow. We’re also excited about the digital tech start-up universe. India is one of the beacons of stability. I mean, if you see China or Europe, it’s getting to be complicated. A lot of other emerging markets are also volatile.

How do you propose to service the fintech space, given their different cultural backgrounds?

A number of our products and services have elements where we use fintechs to collaborate with. And fintechs are also our clients. But I don’t want to define them as only fintechs. I want to define them for a broader tech-universe. We moved fairly early on in identifying this opportunity. By the time they come to a stage when they’re ready to go public, you already have had a relationship with them for five to six years.

Do you see banks like yours becoming incubators of new tech firms? Three decades ago, you had i-flex, which now resides within Oracle?

Yes, I think at a global level because strategy has to be driven globally, right. So, we do have funds which are dedicated to look out for such investments, which could be viable for Citi -- both from an equity perspective, and to help clients with product solutions. It’s something that is ongoing.