Parnika Sokhi Moneycontrol News
Pramit Jhaveri's exit as the Chief Executive Officer of Citibank India brings the performance of the local unit of the third largest American bank into focus.
While it is the largest foreign lender in India, Citibank lags behind Standard Chartered Bank when it comes to the branch-network parameter.
Jhaveri will demit office on March 31, ending his nine-year stint as Citibank's face in India. He is serving as an interim head of India operations currently, after the Reserve Bank of India (RBI) denied him a new three-year term late last year.
In January, Jhaveri was named vice-chairman, banking, capital markets and advisory, Asia Pacific-a new position created with the responsibility to handle the lender's key clientele in the region.
The Jhaveri era
Jhaveri led Citi's India business for almost nine years. He took charge shortly after the banking behemoth had to restructure its global business following the financial crisis. A career Citibanker, he joined Citi India in 1987 and worked across multiple segments. He has a BCom degree from Mumbai's Sydenham College and an MBA in finance and economics from the Simon School of Business, USA.
During his tenure, Citi maintained its lead as the biggest foreign lender by assets in India. The bank's loan book grew to Rs 55,712 crore as on March 2018 from Rs 40,597 crore at the end of March 2011. Its net non-performing assets ratio fell to 0.55 percent from 1.21 percent while the capital adequacy ratio remained steady around 17 percent in the same period. Last financial year, the bank reported a net profit of Rs 3,403 crore compared to Rs 1,424 crore in March 2011.
Jhaveri achieved this with a physical presence of 35 branches and 541 ATMs, which is way lower than its peer Standard Chartered Bank that has the largest branch network of 100 in the country. Standard Chartered Bank reported profit before tax of $141 million (Rs 972.9 crore) in 2018.
Citibank also stayed away from RBI's proposal to convert its India business into a Wholly-owned Subsidiary (WoS) that would have allowed for easier branch expansion.
Also, Citibank is the fifth largest credit card issuer in the country. As per RBI data, the foreign lender had over 2.7 million credit cards outstanding at the end of January 2019. The bank's role in mergers and acquisitions, fundraising and investment banking has also been significant.
So why was RBI not pleased?
On January 11, RBI levied a penalty of Rs 3 lakh on Citibank India for deficiencies in compliance with regulatory instructions on "Fit & Proper" criteria for the board of directors of banks. As per RBI norms, the board of directors are required to disclose personal information along with a list of entities where they hold substantial interests and legal proceedings, if any, being conducted against them. While the central bank did not mention any names, reportedly Jhaveri's personal investments struck a bad note with RBI, leading to the denial of tenure renewal.
New CEO
A Citibank spokesperson has confirmed that Ashu Khullar will take over from Jhaveri from April 1. His appointment is pending with RBI for approval.
Khullar is currently the head of capital markets origination in Asia-Pacific and is based out of Hong Kong, where he moved in September 2017 after serving Citi London for about two decades.
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