--Citigroup's India unit aims for 20% growth in credit cards business --Plans to acquire 1 million new customers in 2-3 years By Nupur Acharya Of DOW JONES NEWSWIRES MUMBAI -(Dow Jones)- Citigroup Inc. (C) is planning to expand its Indian consumer banking operations by ramping up its credit card business and adding one million new customers from the urban middle class over the next two-three years. The plans are a sharp change for New York-based Citibank, which -- along with several other foreign lenders -- was burned by bad debt not too long ago as the global economic crisis led many customers to default on credit card and personal loan payments. But the environment has become better, with new credit bureaus providing detailed information about borrowers -- which is critical for assessing risk profiles of customers. "Though there are uncertainties, the trends are pointing toward potential opportunities, and we are focused on the right target segments," Anand Selvakesari, who heads Citibank's India consumer banking business, told Dow Jones Newswires in a recent interview. He added that Citi India expects the unsecured credit card and personal loan segment to swell by 25%-30% in this financial year through March 2013, and the mortgage lending business to grow 15%-16%. The consumer business contributed 41% to Citi India's total revenue of INR82.16 billion ($1.48 billion) in the year ended March 31, 2011. "We are now clear about the opportunity and the trends in the market and we want to be ahead of the curve on these trends," said Anand. Citi's bullishness runs contrary to complaints from other foreign companies, which say that India's slowing economic growth, a lack of new government initiatives, and recent regulations have tarnished the country's appeal as an investment destination. But the size of the market is difficult to ignore. Spending through credit, debit and pre-paid cards in India grew at 28% between 2009 and 2011 to INR1.5 trillion ($27.1 billion). About 60% of the total spending was through 17 million credit cards while 33% came from 280 million debit cards, Anand said. Citi was among the most aggressive in the credit cards business in India before the global slowdown struck in late 2008. It was forced to shrink its business to 2.2 million cards by February 2012 from 3.2 million in January 2008. It also mothballed Citifinancial -- its non-bank finance arm -- which was once the face of consumer finance for the U.S. giant's India operations. Citifinancial, which had a portfolio of INR26 billion at the end of March, is only servicing existing customers. The bank has been looking to sell the business, but it hasn't found any buyers yet. Local private sector lenders such as ICICI Bank Ltd. and HDFC Bank Ltd. have been shying away from unsecured loans in the aftermath of the 2008 crisis. But a recent Mckinsey report estimates that India's personal consumption, an indicator of consumer spending, is poised to nearly double to INR85 trillion ($153.60 billion) by 2015. The consulting company expects the emerging affluent segment, with annual incomes of INR300,000-INR1.5 million, at about 20 million individuals. It is from this segment that Citi plans to draw its one million new customers from, making up a 5%-6% market share. --By Nupur Acharya, Dow Jones Newswires; +91-22-61456117; nupur.acharya@dowjones.com
