Citigroup plans India branch cuts in digital banking push

Bloomberg

Citigroup Inc., the largest foreign lender in India by assets, plans to shut about 10 percent of its branches in the nation as more customers switch to the firm’s digital platforms to conduct their banking transactions, people familiar with the matter said.
The lender, which has 44 branches nationwide, may close about five outlets to focus on larger cities and wealthier clients, according to the people, who asked not to be identified because the information is private. Citigroup will redeploy staff affected by the closures and doesn’t plan to reduce any headcount from the move, they said.
Kartik Kaushik, the country business manager of Citigroup’s consumer banking business in India, declined to comment specifically on branch closures, though did say that he would put “maximum focus” on areas with the highest growth rates.
“The question is do I see value and potential in all the locations that I am present in now and do I see growth,” Kaushik, who’s based in Mumbai, said in an interview on Friday.
The New York-based bank is focusing on digital banking as a cost-effective means to expand its consumer business, in keeping with other global peers such as HSBC Holdings Plc and Standard Chartered Plc. HSBC said in May that it plans to shut almost half its branches in India and rely more on its electronic platforms. Citigroup shut about 13 percent of its Asian branches in the year to June, bringing its regional total to 461, an exchange filing shows.
About 97.5 percent of the transactions at the bank’s India business are now conducted through digital channels, compared with 75 percent three years ago, Kaushik said. The number of customers who use digital banking in India has doubled in that time, he said.
“We never depended on branches for transactions. We never built the business model on expectations of a branch,” said Kaushik. “In last three years, there is a 40 percent fall in footfall at branches even as we are improving on all operational and profitability metrics.”
Citigroup had the biggest local balance sheet of any foreign bank operating in India, with 1.54 trillion rupees ($23 billion) of total assets at the end of March, according to data compiled by Bloomberg. HSBC ranked second with 1.4 trillion rupees, followed by Standard Chartered at 1.29 trillion rupees, the data show.