Exit of Citibank from Consumer Banking Business in India: How will it impact MSMEs?

As Citibank announced its withdrawal from the retail banking market in India, the event's potential impact on existing customers and the workforce is coming into question.


After nearly three decades in India, American banking giant Citibank has decided to exit the Indian consumer banking segment as part of its renewed global strategy. Although the reasons for the withdrawal of consumer banking services by Citi are not yet clear, retail banking has always been a challenge for foreign banks in the Indian market.

Consumer retail banking services primarily include credit cards, retail banking, mortgages and asset management. Citibank has 35 branches across the country and employs about 4,000 people in the private customer business.

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Citibank has faced the challenges in the local retailing market for many years and has lost its share substantially.

Over the years, Citibank’s involvement in retail has decreased substantially, and internal competition has intensified. In March 2020, the bank had approximately 33 million private customers, 2.2 million credit cards and 1.2 million bank accounts; these figures are much lower than the bank’s initial days. As of December 2020, about 6% of credit card spending was on the market. But that percentage continues to decline as of 2021, according to bank officials.

Impact of Citibank’s Exit on MSME and SMEs

The Citi group entered the Indian market in 1902, and its private banking operations began in 1985. As of March 2020, Citibank had offered loans worth Rs 27,911 for agriculture, affordable housing, renewable energy and small businesses.

Over decades, Citibank has provided capital assistance worth Rs 4,975 crore to the weaker business segments in India under loan commitment campaigns. In addition to banking services for institutional investors, the bank has also supported global financial activities in Mumbai, Pune, Bangalore, Chennai and Gurugram. 

Post its announcement to withdraw from India, Citibank is actively looking for buyers to buy its consumer retail arm. So far, the decision has had no impact on existing customers and employees in India. Bank officials have outlined that Citibank is only exiting the consumer market in India and not closing it down. 

There will not be any adverse effects on Citibank India’s existing consumers and staff due to this decision. The banking major will continue to concentrate on the commercial business in India and will maintain investing more into it. 

Citibank’s Exit is an Opening for other Banking Players 

Analysts say Citi’s exit from Indian retail banking could pave the way for other private banks to stabilize India’s financial sector. Banks such as ICICI, Axis and Kotak are seeking significant market shares in the corporate sector. Citi’s credit card operations are pegged to be the most sought after acquisition among various arms of the bank. This business plumb in the retail division of Citi can get the banks a premium valuation.

Besides, banking professionals and major players will have more opportunities to provide services to micro, small and medium businesses by expanding their business and providing assistance through loans and massive capital injections.

Aakash Sharma
Aakash Sharma
Aakash writes on Startup Ecosystem, Policies, Legal and Regulatory aspects of business planning. An alumnus of Delhi University, he is assistant editor at Dutch Uncles.

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