New Delhi: India is not de-coupled from the rest of the world. That’s what India’s policy makers have been advocating since the financial crisis started spreading around the world. But one of the world’s largest financial institutions, Citi, says that the trouble in the US will not impact business in India. And the high delinquency rates witnessed at CitiFinancial will be curtailed and a turnaround accomplished by June 2009.
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Citi Group had recently received a $45 billion bailout from the US government. Sanjay Nayar, outgoing CEO (South Asia) at Citi says the India operations too have seen some pulling back. The company claims that the actions taken here have no linkage with the crisis in US. They say that they are being more prudent as they see demand slacking across sectors in India. Says Nayar, “Everybody is not spending on every business at the same pace every year to prove a point. You have to scale back some things if the market dynamics change”. The company is still bullish on the Indian market and the entire Asian region because of the steady economic growth seen here.
Citi had recently sold its stake in Citigroup Global Services Ltd (CGSL), its India-based captive business processing outsourcing arm, to Tata Consultancy Services in an all-cash deal for $505 million.
Its troubled financial arm CitiFinancial that reported a loss of Rs235 crores for the first half of FY 2008-09, has been facing a high delinquency rate. The company hopes to turnaround the Non Banking Financial Company (NBFC) by June 2009. Sanjay says “There is no pulling back from the consumer finance business. All that we are doing is that we are re-segmenting the market, offering multiple products through same distribution channels”.
CitiFinancial is one of the most highly-capitalized foreign NBFCs in India with the Citi group having invested over $300-million into the NBFC till now. It offers finance to low and middle income groups.