Citibank rules out India subsidiary, informs RBI

 B S  :Manojit Saha & Somasroy Chakraborty  |  Mumbai / Kolkata  February 22, 2014 Last Updated at 00:58 IST


Major setback to RBI's ambition of making foreign banks convert their branches into subsidiaries


Citibank has ruled out setting up a subsidiary in India and has officially informed the Reserve Bank of India about its decision.

The banking regulator was hoping to convince a few foreign banks to operate in India through wholly-owned subsidiaries (WOSes). But, according to people familiar with the development, Citibank recently wrote to RBI saying it had no plans to establish a WOS in India at this point.

The central bank’s initial effort to persuade foreign lenders to convert their branches into subsidiaries (between March 2005 and March 2009) for better regulatory oversight had failed due to absence of adequate incentives. However, this time, in its new subsidiarisation norms released in November 2013, RBI promised near-national treatment to foreign banks that opted for a subsidiary mode of presence.

Though most foreign banks appear reluctant to establish a subsidiary here, Citi is the only bank that has so far communicated this to the regulator, in writing. The bank’s desire not to set up a WOS in India was mentioned in its recent periodic report to RBI.

Citi confirmed it had no plans to convert its India branches into a subsidiary. “At this point, Citi does not have plans to establish a local subsidiary,” a spokesperson for Citi told Business Standard in an e-mail.

Bankers felt the reciprocity clause in RBI’s guidelines probably deterred Citi from opting for a subsidiary mode of presence. According to the new norms, foreign banks will be given unfettered branch access in India after establishing a WOS, provided their home countries allow Indian lenders to open branches without much restrictions.

“Indian banks are not allowed to expand networks freely in the US. Citi, being a US-based bank, would have found it difficult to convince the regulator in getting a near-national treatment in branch expansion here,” said a banker who did not wish to be named.

Sources said uncertainty on stamp duty and certain areas of taxation, and the need for rural presence might also have influenced Citi’s decision.

Bankers also pointed out that RBI had not made subsidiarisation mandatory for foreign banks that entered India before August 2010, leaving to many of them, including Citi, the option of not creating a WOS in India. According to RBI data, Citi opened its first branch in India in 1963. It currently has 42 branches across the country and three unused branch licences.

Hurdles for foreign banks in creating WOSes

* Near-national treatment in branch expansion not guaranteed due to reciprocity clause

* Need to have significant presence in rural/unbanked regions

* Lack of clarity on tax sops, stamp duty relaxation

Citibank India wins Dun & Bradstreet Banking Award 2011

Source :India Infoline News Service / 12:18 , Sep 13, 2011


The Awards seek to recognize the growth and resilience of the Indian banking industry. 


The winner was determined amongst 62 scheduled commercial banks (SCBs) with a total income of Rs. 1000 million and above.

Citibank India today announced that it has been awarded the ‘Best SME Bank’ for 2011, under the Foreign Bank category by Dun & Bradstreet - Polaris Software Banking Award.The Awards seek to recognize the growth and resilience of the Indian banking industry. .


Rajat Madhok, Head of Commercial Bank, Citi India said, “This recognition stands testimony to the faith clients have in our differentiated offerings. We remain committed to providing innovative solutions on our worldwide platform that will serve the global ambitions of our clients in this critical and growing market segment of the Indian economy.”



Mohan Ramaswamy, COO, Dun & Bradstreet India said, “I congratulate the team at Citibank India for winning the award for Best Foreign Bank in SME Financing by exhibiting a robust performance in the SME segment, thus acting as a catalyst for the development of the small and medium enterprises of the country.”



Citibank set up its Commercial Bank division in 1998 as a dedicated strategic Business Unit focused on the emerging local Corporates.


 In addition to expert advice and services the unit offers its clients a complete range of corporate banking products and services which includes Operating Accounts, Cash Management, Trade Finance, Treasury and Risk Management, CitiDirect Online Banking and Investment Management & Advisory. Strategic Products include Advice on Acquisitions, Mergers and Divestures, Capital Markets, Structured Trade Finance. 


Citibank was the first to introduce electronic banking channels to Emerging Corporates in India which include Online and Phone Banking, email statements as well as event-based email and mobile alerts. 


Citi Commercial Bank is currently a dominant player across several industry verticals like textiles, auto ancillary, chemicals, pharma, information technology, ITES-BPO and capital goods.

Citigroup Confirms Bank’s Network Faced Cyber Attack

Source :cj news India:THURSDAY, JUNE 9, 2011

Reserve Bank of India (RBI) has been stressing upon ensuring cyber security for banks in India. RBI has also constituted the working group on information security. As per the recommendations of the working group, RBI has directed that all banks would have to create a position of chief information officers (CIOs) as well as steering committees on information security at the board level at the earliest.

Meanwhile, RBI sought the inputs of various stakeholders upon the report of the working group. After analysing the public inputs, the final notification has been recently released by the RBI. The notification mandates complying with the recommendations of RBI in a time bound manner.

However, it seems the recommendations of the working group constituted by RBI have still not been implemented. A “progress report” must be sought from banks of India in this regard by RBI as soon as possible.

RBI has also made the appointment of chief of internal vigilance mandatory for banks in India. RBI has also prescribed cyber security due diligence for banks in India. In fact, cyber due diligence and banking due diligence could have prevented the recent Citibank fraud.

The truth is that banks and financial institutions in India are not serious at all regarding cyber due diligence, cyber crimes, financial frauds and cyber security. This is resulting in an increase in banking related cyber crimes and financial frauds.

As per the latest news, Citigroup Inc said computer hackers breached the bank's network and accessed data on hundreds of thousands of bank card holders in the latest of a string of cyber attacks on high-profile companies. Citigroup said about 1% of its card customers were affected by the breach, which had been discovered in May during routine monitoring. The names of customers, account numbers and contact information, including email addresses, were viewed during this cyber attack. However, other information such as birth dates, social security numbers, card expiration dates and card security codes (CVV) were not compromised.

Cyber attacks against banking and financial institutions are very common and frequent. They cannot be eliminated absolutely but efforts must be made to make them as less as possible. Banks and financial institutions of India must consider cyber security very seriously in the larger interest of their customers.

India Police File Case Against Citigroup's Pandit, Other Executives

Citigroup says claims against executives including CEO Vikram Pandit,

 

shown in New York last month, "are completely without basis."

Source; ANANT VIJAY KALA & NUPUR ACHARYA:WSJ:JANUARY 4, 2011

MUMBAI—The Indian police Tuesday registered a case against top Citigroup Inc. officials, including Chief Executive Vikram Pandit, in connection with a estimated three-billion-rupee ($67.2 million) alleged fraud at a Citibank branch in a New Delhi suburb.

The move follows a complaint by bank customer Sanjeev Agarwal, who was allegedly duped in an investment fraud orchestrated by an employee of the Gurgaon branch of the U.S. bank.

The case begins the investigations into the charges leveled by Mr. Agarwal against Citigroup and the executives.

"We have registered a case of fraud on the basis of the complaint received from Agarwal," Dalbir Singh, assistant commissioner of police of Gurgaon, a satellite city of New Delhi, told Dow Jones Newswires.

In addition to Mr. Pandit, Mr. Agarwal's complaint names William R. Rhodes, who retired as senior vice chairman of Citigroup on April 30; Chief Operating Officer Douglas Peterson; Chief Financial Officer John Gerspach; and three others, including Shivraj Puri, the branch employee accused in the investment fraud.

Citigroup in a statement said the Mr. Agarwal's claims against senior executives "are completely without basis and we intend to contest them vigorously."

The bank said it identified the fraud and immediately reported the matter to the regulators and law-enforcement agencies.

"It was on Citi complaint that the Gurgaon police lodged an FIR [first information report] and are currently investigating the matter. Citi will continue to work with the authorities on this investigation," Citigroup said.

Assistant Commissioner Singh said police will investigate the charges and take further action. Mr. Puri was arrested last month and has been suspended by the bank.

Under Indian law, the police are required to register a first information report on the basis of any complaint received that appears to involve a crime. The FIR marks the beginning of the investigations into the alleged crime.

According to a copy of Mr. Agarwal's complaint seen by Dow Jones Newswires, Mr. Agarwal is accusing Mr. Puri of misappropriating about 324 million rupees between August 2009 and November last year.

Mr. Agarwal alleged that Mr. Puri redeemed the investments made with this money without Mr. Agarwal's consent.

Mr. Puri also allegedly sent false statements to Mr. Agarwal that showed the value of the investments made under the scheme at an inflated amount.

Mr. Agarwal is one of several investors who put in money in the scheme. On Sunday, the police arrested Sanjay Gupta, the chief financial officer of Hero Corporate Services, a Hero Group firm, for allegedly receiving commissions to invest Hero's money in the scheme.

The fraud came to light last month after Citibank noticed "suspicious transactions" at the branch.

Police said Mr. Puri, a relationship manager with the bank, lured customers with investment schemes promising high returns. These schemes weren't backed by the bank. Mr. Puri allegedly produced a fake letter of India's capital markets regulator Securities and Exchange Board of India to lend credibility to the scheme.

Investors allegedly were asked to deposit the money in accounts held by Mr. Puri's relatives and close associates. The money was later transferred to Mr. Puri's account and either withdrawn by him or invested in stock markets.

The scale of the fraud hasn't been fully ascertained, but police said it could involve as much as three billion rupees.

Write to Anant Vijay Kala at anant.kala@dowjones.com and Nupur Acharya atnupur.acharya@dowjones.com

Citigroup probing rumor of erroneous trade

Source :7 May 2010, 0846 hrs IST,REUTERS


NEW YORK: Citigroup is investigating a rumor that one of its traders entered a trade that helped precipitate a drop of almost 1,000 points in the Dow Jones Industrial Average, a spokesman for the bank said on Thursday.

Citigroup, the third-largest US bank, currently has no evidence that an erroneous trade has been made, the spokesman said. Earlier, sources told Reuters that the plunge in the Dow Jones Industrial average -- its biggest intraday point drop ever -- may have been caused by an erroneous trade entered by a person at a big Wall Street bank.

Market sources said the erroneous trade may have involved shares of the so-called E-Mini, a stock market index futures contract that trades on the Chicago Mercantile Exchange's Globex trading platform. The composition of the E-Mini is similar to the stocks in the S&P 500.

A CME spokesman said it found no problems with its systems. Other market sources said the erroneous trading involved the IWD exchange-traded fund or the S&P 500 Mini. A person close to BlackRock, which manages the IWD, said there was no unusual trading in the iShares product.

Amid the sell-off, Procter & Gamble shares plummeted nearly 37 percent to $39.37 at 2:47 p.m. EDT (1847 GMT), prompting the company to investigate whether any erroneous trades had occurred. The shares are listed on the New York Stock Exchange, but the significantly lower share price was recorded on a different electronic trading venue.

"We don't know what caused it," said Procter & Gamble spokeswoman Jennifer Chelune. "We know that that was an electronic trade ... and we're looking into it with Nasdaq and the other major electronic exchanges."

A different P&G spokesman had said earlier the company contacted the Securities and Exchange Commission, but Chelune said that he spoke in error. One NYSE employee leaving the Big Board's headquarters in lower Manhattan said the P&G share plunge lay at the center of whatever happened.

"I'll give you a tip," the employee said, speaking on condition of anonymity. "P&G. Check out the low sale of the day. Something screwed up with the system. It traded down $30 at one point." Nasdaq said it was working with other major markets to review the market activity that occurred between 2:00 p.m. and 3:00 p.m., when the market plunge happened.

The exchange later said it was investigating potentially erroneous transactions involving multiple securities executed between 2:40 and 3:00 p.m. Nasdaq also said participants should review their trading activity for potentially erroneous trades.