Citi & #39;S Suvidha Runs Into Rough Weather In Metroes

Citibank's Suvidha scheme is facing a tough time in Mumbai and Delhi in the face of stiff competition put up by new generation private sector banks and a few public sector banks, even as the bank is preparing to roll out the scheme in Kolkata and other major cities.

Even in Bangalore, where the Suvidha scheme was launched initially as a pilot project, Citi is finding it tough as new private banks are aggressively setting up ATMs all over.

"Though the initial going was tough, we have now managed to gain market share in Bangalore," a senior executive in one of the private sector banks said.

Says an official of another new private bank which entered the Bangalore market in late 1999: "Our retail deposits at around Rs 600 crore in the city is more than that of Citi's. Average balances of our customers is also more than that of Citi's. Customers choose the bank depending on their national network as they will have to pay if they choose the ATM of some other bank."

The Suvidha scheme, which targets the middle class, requires the account holder to maintain a minimum balance of Rs 1,000.

The customers can access their Suvidha accounts through ATMs, phone banking and Internet banking. However , customers who approach the branches are required to pay Rs 100 for a transaction.

"This has become a major deterrent factor. Citi wants to discourage branch banking -- a move which has not gone down well with the customers. Other banks have started snatching its customers offering more ATMs as well as branches," said an industry observer.

"When Suvidha was initially launched in Bangalore in 1998, it was a success thanks to the bank's large ATM network. Now private sector banks have beaten Citi as they have managed to roll out ATMs and branches across the country. They have achieved a critical mass, specially in metroes. Comparatively, Citibank has now a low level of penetration of ATMs," a senior banker said.

Citibank has around 130 ATMs across the country compared with ICICI Bank's 550, UTI Bank's 350 and HDFC Bank's 253 ATMs.

These banks are expanding their ATM network at a rate of more than two a week. Even public sector banks such as the State Bank of India (SBI) and the Corporation Bank are on an aggressive ATM push. SBI is planning to put up around 1000 ATMs by the end of the year. These banks have a very wide brick and mortar presence across the country.

The private sector banks also offer phone and Internet banking. They have more phone banking centres across the country compared with Citi. In contrast, Citi has 13 branches. Except for Bangalore where it has around 50 ATMs, it has got a very thin ATM network in other cities.

Suvidha has been able to garner a customer base of 2.5 lakh over a span of three years. On the other hand, new private sector banks are putting in every month 50,000 to 60,000 new customers.