?Manufacturing is the key?
The economic growth is the way of life in India, feels Ajay CEO of Citigroup?s Global Consumer Group.
The economic growth is the way of life in India, feels Ajay Banga, chairman and chief executive officer of Citigroup’s Global Consumer Group International businesses. The continuity in the Indian economic policy despite changes in the government has increased the global confidence index towards India, he told Arun Kumar in an interview.
Much has been done and a lot more needs to be done, particularly in the manufacturing sector that will generate fresh employment and attract foreign capital. Banga’s responsibilities include all credit card, retail banking and consumer finance operations in Asia, Japan, Europe/Middle East/Africa, Latin America, and Mexico. Excerpts:
Where does India fit in Citibank’s global perspective in terms of importance?
India is among the top five markets for the US. It is one of the most prospective markets in terms of growth. Let me give you an overview of some assessment done by us. We believe that nearly 750 million people will be added to the middle class category worldover in the next five years. Out of this, we strongly believe that 25 per cent will be from India. This shows about the potential of Indian market. The other important markets are China, Brazil, Poland, Turkey, Korea and Russia.
Given the current restrictions in terms of opening of new branches, what is your plan for growth?
Yes, there are certain restrictions which prohibit natural growth. But if that is the law of the land, there is nothing wrong. There are other areas like credit card business, corporate banking, investment banking and personal wealth management. Yes, retail banking is an important component in the overall banking, but we have very good stream of income from other areas. And, we will continue to strengthen in these areas. As and when the government allows us to grow organically or inorganically, we would like to grow aggressively. The regulatory environment has undergone a massive change over the past five years and it is becoming much more conducive now than before. Having said that, I believe that there is lot more that needs to be done.
Has the makeover of India perception in the last couple of years made some impact on your bank’s decision towards India?
Certainly, it does. We have invested between $300 to $400 million in India by way of profit plough-back and incremental investments. Going forwards, I strongly feel that this number will go up substantially as and when opportunities arise. The changing perception and huge economic growth made by India is part of boardroom discussion for most of the multinational companies. Since growth in India is demand driven, it is certainly more sustainable. There is consensus on the fact that Indian companies are becoming globally competitive and offer good opportunities.
Between India and China, which is more important for Citibank?
We don’t take decision like which is important. In this case, we believe that both are important countries in term of growth. However, having said this, since we are present in India for over 100 years, the amount of investment is much more than China. In India, Citibank has investment of $1.5 billion and has asset base of $10 billion. India has different position in Citi’s world views. Let me give you another data, over 300 employees from Citibank India are now working in Citibank global operations.
We have an employees base of 16,000. We have witnessed huge flow of funds from foreign institutional investors in the last couple of years, while the FDI flow is comparatively low. What is your reaction to this trend?
I believe the current ratio has to change in future. The fact that India provides one of the most developed markets in term of technologies, or rule of the law allow FIIs to invest in India. At the same time, Indian entrepreneurship has created robust companies which are competitive in the global market. Therefore, foreign companies have not been able to invest directly. Going forward, I believe India needs to strengthen manufacturing sector which will create employment and attract lot of FDI.