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Citigroup and India

In the liberalisation era, beginning early 1990s, foreign banks led by Citi discovered their mettle as it were. Citi especially channelled its well recognised aggression into a slew of new products and services that enabled it to grow at a fast clip. Along with such dynamism, came a seeming contempt of local rules and regulations. Citi, more than any other bank was quick to spot loopholes in regulations and profit from the resulting `arbitrage'. Just two examples will suffice. Without operating a sufficient number of branches, Citi has aggressively built-up a large share of banking business through its wholly-owned non-banking finance companies (NBFCs).

Second, during 1991-92, Citi was an extremely important player in offering treasury related products to customers. Although these were held to be part of a scam, Citi and a few foreign banks though mentioned by the Joint Parliamentary Committee (JPC) as the principal players were left untouched. It is not surprising that Citi has had several run-ins with banking regulators in many countries at different points in time.

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