Citigroup said on Thursday it was not exiting the consumer finance business in India, but had decided to reposition its products due to a rise in defaults in recent months.
Refusing to disclose details, Citi India Chief Executive Officer Sanjay Nayar told reporters that non-performing assets in the consumer finance segment were much larger than expected, but added that business remained 'satisfactory'.
"It is classic over-indebtedness, consumers were over-leveraged, while the underlying capacity remained unchanged," he said on the sidelines of a press conference.
Nayar said losses had also resulted in the bank, which is trying to set its house in order amid the financial turmoil in the United States, shutting down some of its ATMs.
"We are only repositioning and resegmenting the products. The company's business is facing a tough competition because of the entry of new players in the last three to four years," he added.
Reiterating Citi's commitment to the country and the growth potential in the market, Nayar said the bank had brought in $250 million to support the business in India.
Nayar also said Citibank India had raised about $500 million in an infrastructure fund with Infrastructure Development Finance Company, which will be used to invest in roads, ports and utilities in India.
In February 2007, Citigroup had agreed to start a $5 billion Indian infrastructure fund with Blackstone and two Indian finance companies in February 2007. The fund-raising is in the first phase.
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